What is an ETF?

ETF stands for ‘Exchange Traded Fund’, where a basket of securities (the fund) is traded like a single stock.  ETFs can be made of stocks, bonds, commodities, or currencies and are typically designed to track the performance of a specific index, like the S&P 500 index for stocks, the US Dollar versus the Euro for currencies, or the price of gold for commodities.  Through ETFs, investors can gain exposure to a variety of asset classes or individual sectors within a particular asset class with the ease of transacting in a single security.  So instead of buying a dozen or hundreds of individual US technology stocks, for example, investors can invest in the US technology sector with a single ETF, such as the Dow Jones U.S. Technology ETF. 

All investment carries risk. Past performance is not indicative of future returns, which may vary.  Investments in stocks and ETFs may decline in value, potentially leading to a loss of principal. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading.

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