What are ETFs?

Each exchange-traded fund (ETF) is essentially a basket of stocks and bonds. It’s one of the most economical ways to get access to lots of stocks, so you keep more of your money. An ETF is typically passively invested and held by a major financial institution, such as BlackRock or Vanguard. The portfolio mix replicates an index designed by a reputable financial research company. It can either be the research department of the company issuing the ETF, or a reputable third-party company such as MSCI, Inc. or Standard & Poors. Despite the fact that ETFs have investment exposure to many securities, they trade on major exchanges, much like common stocks, which makes them more liquid than typical mutual funds. They also typically have much lower management fees than mutual funds. 

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