What is an ETF?
From: ishares.com
5 ETF Must-Knows
1. What is the difference between ETFs and mutual funds or stocks?
iShares ETFs combine popular features of both. Like a mutual fund, an ETF is a collection of stocks or bonds. And like a stock, you can buy and sell an ETF throughout the day as long as the market is open.
2. What are the benefits of ETFs?
They can help you grow your money. Over the past 5 years, iShares S&P style box ETFs have outperformed 90% of active mutual funds in the same category.
On average, they cost less than other investment types. Generally, iShares ETFs cost about 1/3 as much and have 1/2 the average tax cost than the typical mutual fund.
3. Are ETFs professionally managed?
iShares ETFs make it easy to invest in a wide array of markets, whether broad like the S&P 500, in niche sectors, or targeted to a specific goal.
iShares ETFs are overseen by some of the most experienced portfolio managers in the industry. Our fund managers aim to ensure the ETF does what it’s supposed to do. This includes closely matching the ETF’s benchmark index, keeping its fees low, and minimizing the potential for capital gains taxes.
Index ETFs differ from actively managed funds, in which the manager attempts to “beat” the market’s performance, which often increases fees and taxes. Beating the markets – especially after fees – can be quite challenging.
In fact, iShares S&P ETFs have outperformed 90% of actively managed U.S. mutual funds in their associated Morningstar “style box” categories.
4. How do you buy an ETF?
There are two easy ways to purchase iShares ETFs:
-Talk to your advisor about adding iShares ETFs to your portfolio.
-Purchase iShares ETFs directly from any online brokerage account. Fidelity offers 70 iShares ETFs commission-free.
5. How do you use ETFs in your portfolio?
ETFs are extremely versatile. Many investors use them to pursue long term goals, such as funding their retirement or growing wealth. Others take advantage of ETFs to help achieve specific goals, such as seeking income or managing against jumpy markets. And those with strong market views use ETFs to seek timely new opportunities, instead of picking individual stocks, bonds or mutual funds.
