Exchange Traded Funds (ETFs) are funds that track a given index or invest in a specific category of assets. These funds are usually traded within standard brokerage accounts and allow an investor to invest in a sector without any of the headaches of direct investment. Removing those headaches and adding diversification comes at a cost in fees of course, and returns generally won’t match what some investors could achieve through direct investment.
REIT ETFs — ETFs that invest in REIT securities and related derivatives. REIT ETFs are passively managed around an index of publicly traded real estate owners. REIT ETFs can deliver above-average dividend yields.
Gold ETFs — An ETF that invests in raw gold assets, which are held in trust by the fund manager. Usually, gold ETFs are established as grantor trusts, where each share of the ETF represents the specific right to a precise quantity of gold.
Double Gold EFT — An ETF that tracks the value of gold attempts to deliver price movements equal to double the movements of the underlying gold value.
Reverse Gold ETF — ETFs that are intended to trade in a direction that is the opposite of gold. Reverse gold ETFs (aka inverse gold ETFs), are used to hedge against a downturn in gold prices. They usually deliver the inverse of the daily return of physical gold. They also come in leveraged varieties intended to deliver a multiple of the daily inverse return of gold, like the opposite of a Double Gold ETF.
Silver ETFs — An ETF that invests in raw silver assets, which are held in trust by the fund manager. Like gold ETFs, silver ETFs are usually established as grantor trusts, where each share of the ETF represents the specific right to a precise quantity of silver, measured in ounces.
Dividend ETF — Any ETF that invests in a basket of high-dividend-paying common stocks, preferred stocks or REITs. The indexes used to create dividend ETFs vary by fund manager, but most contain stocks with a high level of liquidity and above-market dividend yields.
Electric Utilities Industry ETF — An ETF that invests in electric utility companies. Even in more general utility ETFs, electric companies make up about 80% of the holdings.
Emerging Market ETFs — An ETF that holds stocks from emerging market economies, such as the “BRIC” countries (Brazil, Russia, India and China). The countries vary but all funds should be passively managed and contain equities from multiple countries.
Energy ETFs — A broad segment of ETFs including funds focused on oil and gas exploration, distribution and sale of gas and related refined products, electric utilities and alternative (green) energy production. Energy ETFs may invest only domestically in United States-based companies, internationally based energy companies, or a blend of the two.
ETFs of ETFs — Watch out, we’re about to get meta here. This is an ETF that tracks other ETFs, a fund full of funds.
Euro ETFs — An ETF that invests in the euro currency. Like precious metals, Euro ETFs are often set up as currency trusts or grantor trusts, meaning that stakeholders have a specific claim to a set number of Euros per share.
Index ETF — ETFs that follow a certain index as closely as possible. Index ETFs are like index mutual funds, but mutual fund shares can only be redeemed at one price daily, whereas index ETFs can be traded throughout the day on exchanges. Through an index ETF, investors get exposure to a large number of securities in a single transaction. Index ETFs can cover just about any market, sector or class of stocks and all incorporate a passive investment strategy.