Different types of ETFs in the US market

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Exchange-Traded-Funds (ETFs) are a type of investment fund which can be traded on the stock exchange with real-time pricing. ETFs are a combination of stocks and bonds which are traded under one fund.

There are equity EFTs and non-equity ETFs which hold assets such as bonds, commodities and currencies. ETFs are publicly traded securities and investors can trade them like they trade stocks. ETFs are designed to be tax efficient and are more attractive tax-wise. Before you invest in ETFs you should do thorough research.

Some of the brokers provide an app for Online share trading. You can easily buy or sell stocks, bonds and ETFs at the tap of a finger. You can easily access the US market. The app uses AI-enabled software to offer you tips, recommendations and advice on how you should trade.

Types of ETFs

● Index ETFs
Index ETFs are the most popular category. These funds tend to replicate and track specific indexes like Nasdaq. These funds tend to replicate an index by holding in their portfolio the contents of the index or a sample of the securities in the index. These ETFs can be traded throughout the day. Index funds are managed passively and have low expense ratios.

● International ETFs
These ETFs track foreign securities and they can be global or a specific country. By investing in these you can diversify your portfolio geographically. ETFs in a specific country carry more risks than the ones that are spread across multiple countries. If the ETF in a particular country faces financial hardships then only the ETFs based in that country will suffer. The expense ratio of such ETFs is more.

● Sector ETFs
These ETFs invest in the stocks and securities of a particular sector. Usually, its name describes the sector or the industry it invests in. By investing in such ETFs investors can get exposure to a particular sector and they need not buy the stocks of the companies individually.

● Thematic ETFs
These ETFs focus on a broad theme as a whole like disruptive technologies, climate change and more. You need not have the knowledge and the required expertise to select stocks in a theme.

● Dividend ETFs
These ETFs invest in a basket of dividend-paying stocks which means they invest in high dividend-paying companies. These ETFs provide long-term growth and also a steady income. These funds give you the option to hold a basket of dividend-paying stocks rather than buy them individually.