An Exchange-Traded Fund (ETF) is an investment fund that Trading on stock exchanges, much like individual stocks. Here are some key points about ETFs:
- Structure: ETFs pool together a collection of securities, such as stocks, bonds, or commodities, into a single fund. This allows investors to buy shares of the ETF, which represent a portion of the fund’s holdings.
- Trading: Unlike mutual funds, which are priced once at the end of the trading day, ETFs can be bought and sold throughout the trading day at market prices.
- NISM: There are various types of ETFs, including:
- Index ETFs: Track a specific index like the S&P 500.
- Sector and Industry ETFs: Focus on specific sectors like technology or healthcare.
- Commodity ETFs: Invest in commodities like gold or oil.
- Bond ETFs: Hold a portfolio of bonds.
- Thematic ETFs: Focus on specific themes or strategies, such as sustainability or innovation.
- Benefits: ETFs offer several advantages, including diversification, lower expense ratios compared to mutual funds, and tax efficiency.
- Examples: Some popular ETFs include the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index, and the iShares MSCI Emerging Markets ETF (EEM), which focuses on emerging market stocks.
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