I’m Keith DeGreen and this is your Investors Minute.
An ETF tracks the price performance of an underlying index of stocks, bonds, whatever — but not always as you might think.
There are 13 types of ETFs. Are you ready?
- U.S. and foreign Market-Index ETFs
- Foreign currency ETFs
- Sector and Industry ETFs
- Commodity ETFs
- Derivative ETFs
- So called “Style” ETFs
- Bond ETFs
- ETNs – or Exchange-Traded Notes
- Inverse ETFs
- Leveraged ETFs
- Actively Managed ETFs; and
- Dividend ETFs
The key is to know not only what is in the index that an ETF tracks, but how that ETF is designed to react when the index rises or falls in value. An inverse ETF will move in the opposite direction of its chosen index. A leveraged ETF will rise and fall much faster than its index, and so on.
ETFs are great investment vehicles – but always do your homework first!
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