Investing in exchange traded funds (also known as ETFs) offers investors a plethora of options and flexibility to build a diverse portfolio quickly. Unlike mutual funds, which often require a minimum investment of $1000 or more, investors can purchase as many or as few shares of an ETF as they wish. And unlike individual stocks, which make it difficult to quickly build a diversified portfolio, exchange traded funds enable investors to purchase several different stocks with one investment.
Just What is an Exchange Traded Fund?
An exchange traded fund is a basket of investments, usually either stocks or bonds, but could also include real estate, commodities, or other assets, that is traded on stock exchanges. Exchange traded funds are most often traded on the American Stock Exchange, but are also on the New York Stock Exchange, among others. ETFs are very similar to index funds in the sense that they are typically constructed to track a specific index and have low trading costs.
