What Is an ETF?

ETFs, or exchange-traded funds, are investment tools that combine traits of stocks and index funds. They are passively managed, diversified, and low-cost, trading on exchanges like stocks. ETFs hold actual securities, such as bonds or stocks, in baskets. Investing in ETFs, like gold ETFs, offers safety and ease without needing wealth. They rarely incur yearly capital gains taxes, making them attractive. ETFs have grown significantly, trading more than the US GDP annually, and are expected to remain a key part of investing.

What are ETFs primarily known for combining?

• Traits of real estate and commodities

• Traits of stocks and index funds

• Traits of mutual funds and bonds

• Traits of savings accounts and CDs

How are ETFs typically structured?

• As savings accounts

• As individual stocks

• As mutual funds

• As baskets of securities

Which of the following is an example of a type of ETF?

• A currency ETF

• A gold ETF

• A technology ETF

• A real estate ETF

What is one major tax advantage of ETFs compared to mutual funds?

• ETFs incur taxes only when shares are sold for a profit

• ETFs incur taxes annually regardless of sales

• ETFs have no tax advantages

• ETFs incur yearly capital gains taxes

How significant is the trading volume of ETFs in the US?

• Less than the US GDP

• Equal to the US GDP

• More than the US GDP

• Not significant compared to the US GDP