What’s an ETF?

Written by Bode
Updated 2 years ago

An ETF is a collection of stocks, commodities, bonds or other instruments that tracks an underlying index.

If stocks were fruits, this would be an investor’s smoothie. ETFs are often used by investors to diversify their risks. Some investors prefer to own stocks in exactly one company. Others prefer owning the whole industry. Investors who prefer the latter would buy an ETF. 

Like a smoothie, there are different flavours of ETF: it can be a certain industry (retail or consumer services), a certain region (China or Frontier/Emerging market stocks), or certain market (buy the whole of the US market or the Chinese market). These ETFs are designed by professional fund managers with experience studying the stock market. 

Some of the popular ETF brands on Chaka include BlackRock iShares, State Street Global Advisors (SPDR), Vanguard, Fidelity, Invesco, and Charles Schwab. 

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