Types of ETFs

Broad Market

The biggest and most popular ETFs are broad-market ETFs. They track indexes that cover a large part of the stock market and only include securities with reasonable size and liquidity.

Total Market

Similar to broad-market but these ETFs aim to track the entire stock market, not just the biggest and most actively traded companies.

Sector

While broad-market ETFs have a small fraction allocated to each sector, some ETFs allow you to invest heavily in specific sectors like technology, real estate, biotech or consumer staples.

Dividend

These ETFs include companies with a strong history of dividend increases and offer capital preservation, growth and income by paying out hefty dividends to investors.

Growth

These are designed to invest in stocks who have the potential for fast growth. Growth stocks typically don’t pay dividends because the companies usually want to reinvest any earnings in order to accelerate growth in the short term.

Commodity

Commodity ETFs offer exposure to commodity markets, which can provide returns that aren’t necessarily linked to those of the stock market. Fund holdings could include crude oil, gasoline, natural gas futures, crops like wheat, soybeans, corn, and sugar, or metals & precious metals.

Currency

Similar to Commodity ETFs, Currency ETFs aren’t tied to the stock market. They are designed to let you profit from moves in foreign currency (forex) values compared to the U.S. dollar.

Bonds

There are many different types of ETFs that focus on bonds. Some include corporate bonds, government, emerging markets, and high yields. It is popular for investors to use bonds as a way to balance the volatility of stocks in their portfolios.

Inverse

Inverse ETFs look to profit from a decline in the value of an underlying benchmark. This is an easy way to make money if you think the market will go down.

International

If you’re looking to diversify your portfolio by investing in global securities, take a look at international ETFs. You can find “all world” ETFs that hold the best stocks from across the globe in a single fund, often for a fraction of the cost of buying each stock individually.

Leveraged

While a traditional ETF typically aims to track a particular index as closely as possible, a Leveraged ETF tries to amplify the daily returns of an underlying index by 2x or 3x. These are high risk, high reward investments.