The textbook definition of an ETF, or Exchange Traded Fund, is a low-cost fund that tracks an index and trades like a stock. True statement, but that definition hardly captures the possibilities of this investment vehicle. The ETF has tremendous advantages over similar products such as stocks and mutual funds.

ETFs provide diversification you can’t get with a single stock. Investing in an entire sector decreases volatility and insulates your risk of quick and dramatic draw downs. ETFs exercise even more of an advantage over mutual funds including: transparency, real-time pricing, liquidity, and tax benefits.

ETFs also provide exposure to asset classes which, until recently, were off limits to the average investor. Inverse, Leveraged, Commodities, Emerging Markets, Frontier Markets, Precious Metals, Currencies, Bonds, and just about any sector of the US Economy.

The bottom line is there is no longer a reason why you shouldn’t have a balanced portfolio. Keep reading, learn more and use ETF Port resources to find the ETFs best for your portfolio.

Top ETF Port Frequently Asked Questions

How are ETFs and ETNs different?

When an ETF is purchased, a portion of the fund is directly owned by the purchaser and is related to the index. When an ETN is purchased, the purchaser relies on the solvency of the issuer for redeeming the fund. ETNs are unsecured debt securities of the issuer. They are a promise by the issuer to pay the investor the amount reflecting a change in the underlying index. The purchaser can redeem the fund when the ETN reaches maturity, or the ETN can be traded on an exchange at market price.