Research ETFs for Smart Investing

Researching ETFs is a crucial step in smart investing, and it's essential to understand the various types of ETFs available. There are over 7,000 ETFs listed globally, covering a wide range of asset classes, sectors, and geographic regions.

To get started, it's helpful to categorize ETFs into three main types: index ETFs, actively managed ETFs, and commodity ETFs. Index ETFs track a specific market index, such as the S&P 500, while actively managed ETFs have a fund manager who actively selects stocks or bonds. Commodity ETFs track the price of physical commodities like gold or oil.

One of the most popular types of ETFs is the index ETF, which accounts for over 70% of all ETF assets. This is because index ETFs are often seen as a low-cost and transparent way to invest in the market.

An exchange-traded fund (ETF) is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock.

ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks.

The first ETF in the U.S. was the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index.

ETFs can even be designed to track specific investment strategies.

Investing in ETFs is a great way to diversify your portfolio and reduce risk. ETFs are traded on stock exchanges, just like individual stocks.

To get started, you'll need to open a brokerage account with a reputable online broker. Many online platforms offer commission-free trading, which means you won't have to pay fees to buy or sell ETFs.

ETFs are available on most online investing platforms, retirement account provider sites, and investing apps like Robinhood. Most of these platforms offer commission-free trading, making it easy to get started.

The expense ratio of an ETF is the cost to operate and manage the fund, and ETFs typically have low expenses because they track an index.

Some popular online brokers for ETF trading include Vanguard, Fidelity, and Charles Schwab. These platforms offer a wide range of ETFs to choose from, including industry-specific ETFs that track a particular sector or industry.

Before investing in an ETF, it's a good idea to do some research and compare different options. You can use an ETF screening tool to narrow down your choices based on factors like trading volume, expense ratio, past performance, and holdings.

Here are some key differences between ETFs and mutual funds to consider:

Investing in ETFs can be a great way to gain exposure to a particular market or sector, and many ETFs have a low minimum investment requirement.

ETFs come in various types, each with its own unique features and benefits. There are passive ETFs that aim to replicate the performance of a broader index, such as the S&P 500.

Actively managed ETFs, on the other hand, have portfolio managers who make decisions about which securities to buy and sell. This approach can provide benefits over passive ETFs, but it comes with higher fees. Some actively managed ETFs track a single industry or sector, like automotive or energy.

Bond ETFs are used to provide regular income to investors and are backed by government, corporate, and municipal bonds. They don't have a maturity date, unlike their underlying instruments. Commodity ETFs invest in commodities like crude oil or gold, allowing investors to diversify their portfolios at a lower cost.

Currency ETFs track the performance of currency pairs, enabling investors to speculate on exchange rates or hedge against volatility. Bitcoin and Ethereum ETFs provide exposure to the price movements of these cryptocurrencies, making it possible to invest in them through regular brokerage accounts.

Some ETFs are designed to earn gains from stock declines, known as inverse ETFs, or to return multiples of the underlying investments, called leveraged ETFs. These products use derivatives and debt to achieve their goals, but they come with higher risks and fees.

Here's a quick rundown of the main ETF types:

Our ETF database is one of the industry's most comprehensive, covering almost 2,500 ETFs.

This means you have access to a vast array of investment options, allowing you to diversify your portfolio with ease.

CFRA's unique holdings-based methodology provides you with proprietary quant-based research reports and ratings for each ETF, giving you a solid foundation for making informed investment decisions.

This approach helps you avoid choosing funds solely based on valuation and past performance, which can be unreliable indicators of future success.

Our ETF database incorporates forward-looking indicators to identify funds with the highest likelihood of outperformance, giving you a competitive edge in the market.

ETFs come in many shapes and sizes, but let's break down the main types. Passive ETFs aim to replicate the performance of a broader index, such as the S&P 500.

Actively managed ETFs, on the other hand, don't target an index - portfolio managers make decisions about which securities to buy and sell. They have benefits over passive ETFs but charge higher fees.

Bond ETFs are used to provide regular income to investors, with distribution depending on the performance of underlying bonds. Unlike their underlying instruments, bond ETFs don't have a maturity date.

Industry or sector ETFs track a single industry or sector, like automotive or energy, and aim to provide diversified exposure to a single industry. BlackRock's iShares U.S. Technology ETF (IYW) tracks the Russell 1000 Technology RIC 22.5/45 Capped Index.

Commodity ETFs invest in commodities like crude oil or gold, and can diversify a portfolio. Holding shares in a commodity ETF is cheaper than physical possession of the commodity.

Currency ETFs track the performance of currency pairs, and can be used to speculate on exchange rates or diversify a portfolio.

Bitcoin ETFs expose investors to bitcoin's price moves in their regular brokerage accounts by purchasing and holding bitcoin as the underlying asset. Bitcoin futures ETFs use futures contracts traded on the Chicago Mercantile Exchange and track the price movements of bitcoin futures contracts.

Ethereum ETFs provide a way to invest in ether, the currency native to the Ethereum blockchain, without directly owning the cryptocurrency.

Inverse ETFs earn gains from stock declines without having to short stocks, using derivatives to short a stock. They are actually exchange-traded notes (ETNs) and not true ETFs.

Leveraged ETFs seek to return some multiples (e.g., 2× or 3×) on the return of the underlying investments, using debt and derivatives like options or futures contracts to leverage their returns.

Here are some examples of ETF types:

ETFs come in various types, each with its own set of features. Some ETFs are actively managed, which means they have higher fees.

ETFs can be focused on a single industry or commodity, which can limit diversification. This is because they concentrate a large portion of their assets in a small number of positions.

There are different types of ETFs, including those that track a specific market index or sector. These ETFs provide diversification relative to an individual stock purchase.

However, some ETFs are highly concentrated, holding a large portion of their assets in just a few positions. This can offer less diversification than other funds with a broader asset distribution.

ETFs with a low expense ratio and commission fees are a great option for investors. These fees can add up over time, so it's essential to consider them when choosing an ETF.

Here are some key features to consider when evaluating ETFs:

However, there are also some potential drawbacks to consider:

Our forward-focused approach to ETF and mutual fund research is designed to help you make informed investment decisions. This unique methodology incorporates advanced machine-learning techniques to account for critical factors across reward, risk, and cost categories.

We use a blend of forensic and fundamental approaches, including earnings quality scores and our proprietary Stock Appreciation Ranking System (STARS). This allows us to provide a comprehensive view of each fund's potential for outperformance.

Our ratings methodology reflects the unique nature of both ETFs and mutual funds, without forcing either into a box that doesn’t fit. This means we can accurately assess the strengths and weaknesses of each fund.

We analyze over 2,500 ETFs and 15,000 mutual funds using our holdings-based methodology and comprehensive ETF database. This gives us a deep understanding of each fund's underlying assets and potential for growth.

Our forward-focused approach also considers trailing analysis, but we don't rely solely on past performance when making our ratings. This helps us identify funds with the highest likelihood of outperformance, rather than just those that have done well in the past.

Incorporating global bond ETFs into your investment portfolio can provide a compelling advantage through diversification and exposure to international markets.

The article highlights the benefits of global bond ETFs, showcasing their potential to reduce risk by spreading investments across different markets.

You can gain access to a wide range of international bond markets with a single investment, making it easier to manage your portfolio.

This diversification can help you navigate market fluctuations and potentially reduce losses.

Global bond ETFs offer a convenient way to invest in international bonds, eliminating the need to purchase individual bonds from different countries.

By doing so, you can tap into the benefits of international markets while minimizing the complexities of individual bond investments.

The article also considers the risks associated with global bond ETFs, emphasizing the importance of careful consideration and research before making an investment decision.

It's essential to weigh the potential benefits against the risks and consider your individual financial goals and risk tolerance before investing in global bond ETFs.

If you're new to ETFs, it can be overwhelming to choose which ones to invest in. The SPDR S&P 500 (SPY) is the oldest and most widely known ETF, tracking the S&P 500.

Many investors start with this ETF as it provides broad market exposure. The iShares Russell 2000 (IWM) is another popular choice, tracking the Russell 2000 small-cap index.

This ETF is ideal for those who want to diversify their portfolio with smaller companies. The Invesco QQQ (QQQ) is known as "cubes" and tracks the tech-heavy Nasdaq 100 Index.

Investors who want to focus on the tech industry often choose this ETF. You can also consider sector ETFs that track individual industries like oil (OIH), energy (XLE), financial services (XLF), real estate investment trusts (IYR), and biotechnology (BBH).

These ETFs offer a targeted approach to investing in specific sectors. If you're interested in commodities, you can look at commodity ETFs like gold (GLD), silver (SLV), crude oil (USO), and natural gas (UNG).

Here's a brief overview of some popular ETFs:

ETF investors can benefit from companies that pay dividends, which are a portion of earnings allocated to investors.

Dividends can provide a regular income stream for ETF shareholders.

An ETF is more tax-efficient than a mutual fund because most buying and selling occur through an exchange.

This means ETF investors don't incur a tax liability each time they sell their shares, unlike mutual fund investors who must pay taxes on their gains.

ETF shareholders are entitled to a share of earned interest or dividends and may get a residual value if the fund is liquidated.

Research ETFs have a long history, dating back to the 1990s when the first ETFs were introduced in the US. They were created to give investors a more efficient and cost-effective way to gain exposure to various asset classes.

The first ETF, the SPDR S&P 500 ETF (SPY), was launched in 1993 and was designed to track the performance of the S&P 500 index. It was a groundbreaking product that paved the way for the creation of other ETFs.

The early days of ETFs were marked by a relatively small selection of funds, but over time, the market has grown exponentially, with thousands of ETFs now available to investors.

The first exchange-traded fund (ETF) is often credited to the SPDR S&P 500 ETF, launched by State Street Global Advisors on January 22, 1993. This marked a significant milestone in the history of ETFs.

However, there were some precursors to the SPDR S&P 500 ETF, including Index Participation Units listed on the Toronto Stock Exchange (TSX), which tracked the Toronto 35 Index and appeared in 1990.

An ETF is more cost-effective and liquid than an index mutual fund. This is a significant advantage for investors who want to minimize their expenses and maximize their returns.

You can buy an ETF throughout the trading day, whereas a mutual fund trades via a broker after the close of each trading day. This flexibility is a major benefit for investors who want to make quick trades or adjustments to their portfolios.

ETFs and index mutual funds are often constructed in the same way, holding the stocks of an index. However, the key difference lies in their trading and cost structures.

ETFs offer diversification benefits, allowing you to spread your investments across various asset classes with a single trade.

This means you can gain exposure to a broad range of markets, such as bonds, stocks, and commodities, without having to buy individual securities.

With an ETF, you can own a small piece of a large portfolio, making it easier to get started with investing.

For example, the article mentions that some ETFs track a specific index, like the S&P 500, while others focus on a particular sector or geographic region.

This flexibility makes ETFs a popular choice for investors who want to tailor their portfolios to their individual goals and risk tolerance.

Choosing an ETF provider can be a daunting task, but CFRAMarkets stands out from the rest. With a wide range of ETFs to choose from, you're sure to find one that fits your investment goals.

One of the key benefits of CFRAMarkets is their low-cost structure, which can save you a significant amount of money in fees over time. This is especially important for long-term investors who want to maximize their returns.

CFRAMarkets also offers a user-friendly trading platform that makes it easy to buy and sell ETFs, even for those with no prior experience. Their platform is designed to be intuitive and accessible, so you can focus on your investments rather than navigating a complicated system.

Their customer support team is also highly responsive and knowledgeable, able to answer any questions you may have and provide personalized advice when needed. This level of support can be a game-changer for new investors who are just starting out.

ETFs offer a cost-effective way to gain exposure to a broad basket of securities with a limited budget.

You can build a portfolio that holds one or many ETFs, allowing you to diversify your investments without breaking the bank.

Investors can buy shares of a fund that targets a representative cross-section of the wider market, rather than buying individual stocks.

However, there can be additional expenses to keep in mind when investing in an ETF.