A Mini Guide to ETFs

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Exchange-traded funds, or ETFs, are investment funds that trade on stock exchanges, much like individual stocks. 

An ETF holds a collection of assets, such as stocks, bonds, or commodities, which are designed to track the performance of a specific index or sector. 

For example, an ETF might track the S&P 500, giving investors exposure to the 500 largest companies in the U.S. or focusing on a specific industry, like technology or healthcare.

ETFs combine the diversification benefits of mutual funds with the flexibility of trading like stocks. This means you can buy and sell ETF shares throughout the trading day at market prices, unlike mutual funds, which are only traded at the end of the day at their net asset value (NAV).

There are several types of ETFs, including:

• Equity ETFs: These invest in stocks and can track a broad market index, like the S&P 500, or a specific sector, like technology or healthcare. For example, the SPDR S&P 500 ETF (SPY) tracks the S&P 500 index.

• Bond ETFs: These invest in bonds, providing exposure to different types, such as government, corporate, or municipal bonds. The iShares Core U.S. Aggregate Bond ETF (AGG) is an example that tracks the Bloomberg Barclays U.S. Aggregate Bond Index.

• Commodity ETFs invest in commodities like gold, oil, or agricultural products. The SPDR Gold Shares ETF (GLD) is an example that tracks the price of gold.

• International ETFs invest in stocks or bonds outside your home country, providing exposure to global markets. The Vanguard FTSE Emerging Markets ETF (VWO) is an example that focuses on stocks in emerging markets.

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