ETF (Exchange-Traded Fund)
ETF — Exchange-Traded Fund#
Definition#
An ETF (Exchange-Traded Fund), or tracker, is an investment fund listed on a stock exchange that replicates the performance of an index, a sector, a commodity, or another asset class. Unlike traditional mutual funds, an ETF is bought and sold on the exchange like an ordinary share, at any point during the trading day.
The first ETF (SPDR S&P 500, ticker SPY) launched in 1993. Today more than 10,000 ETFs exist worldwide, holding over $12 trillion in assets. Among the most popular are the Vanguard S&P 500 (VOO), the iShares MSCI World (IWDA), and the Invesco QQQ (NASDAQ 100). Their fees are extremely low: from 0.03% to 0.50% per year, against 1.5-3% for a traditional fund.
Key Takeaway
The ETF is the ideal instrument for the retail investor: instant diversification, low fees, high liquidity, and full transparency. Warren Buffett recommends that most investors simply invest in an S&P 500 ETF. On TradeSynapse, simulate your ETF investments to find the allocation that suits you.
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