S&P's new ETF Research Report describes the underlying assets that the ETF tracks.
Types of ETFs
Sponsors, eager to meet investors' demand for more opportunities to diversify within an asset class by making a single purchase, have expanded the concept of exchange traded funds to encompass nearly all investment categories that you can purchase.
Equity ETFs
Equity ETFs hold baskets of stocks tracked by the domestic or international stock index to which the ETF is linked.
Bond ETFs
Bond ETFs link to indexes that track domestic investment-grade corporate bonds, US Treasury securities of varying maturities, agency bonds, including mortgage-backed securities, and municipal bonds.
REIT ETFs
To participate in the real estate market, you can buy shares in ETFs that track the performance of real estate investment trusts (REITs) — companies that invest in commercial and residential real estate.
Commodity ETFs
Commodity ETFs run the full gamut. Some track individual commodities
such as silver, oil, steel, natural gas, or agricultural products, while others track a commodity index or a basket of different commodities.
Gold and Silver ETFs
Investors have long turned to precious metals, gold in particular, as a hedge against market uncertainty.
Exchange Traded Notes
Close cousins of ETFs, exchange traded notes (ETNs) are unsecured debt securities that promise the issuer will pay a return equal to what the linked benchmark index earns.
INVERSE ETFs
An inverse ETF moves contrary to the index it tracks. That means the ETF goes up when the index goes down. Investors can use inverse ETFs to hedge an existing portfolio and provide insurance against a market decline. Some ETF sponsors have even introduced double inverse ETFs to provide double the return when an index declines.
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