TYPES OF EXCHANGE TRADED FUNDS:

Owing to the popularity that the ETFs are gaining, it is safe to say that a lot of investors are putting their money in exchange-traded funds. Before you make the decision of investing in ETF, you should know the different types of ETFs and get to know what you are going to put your money in. Below mentioned are some types of exchange-traded funds that will help you understand them better.
 

Types Of Exchange Traded Funds:

Exchange-traded funds offer a wide spectrum for investors to invest in. This diversity is a much-liked trait of ETFs. Following are some common types of exchange-traded funds:
 

     - Commodity ETF:

A lot of ETFs cover various commodities, such as metals, oil, etc. Investors can buy ETFs that cover the changes in prices of different commodities on the stock market. This can diversify their portfolio. The basic advantage is that when investing in a particular commodity, say Gold, investors don’t have to buy the whole safe of gold. Rather, they buy shares and invest in gold without actually paying thousands of dollars. United States Oil Fund, Invesco DB Commodity Index Tracking Fund, and SPDR Gold MiniShares Trust are one of the best commodity ETFs.
 

     - Equity ETF:

They are the ETF that track equity indexes or sectors. For example; SPY, IVV, VOO, FTSE, etc.
 

     - Dividend ETF:

This type of ETF tracks dividend index. A dividend index consists of stocks that pay dividend fund. The highest dividend-paying ETF in the S&P 500 is SPYD.   
 

     - Industry ETF:

Industry ETF tracks a sector index that represents a certain industry. These ETFs mimic the performance of a particular industry index. The top sector ETF is MSCI Financial ETF FNCL.
 

     - Bonds ETF:

These are the types of exchange-traded funds that invest in bonds with different strategies. Bond ETFs cover a correlating bond index which consists of the largest and most liquid bonds. Vanguard Total Bond Market ETF (BND), Schwab U.S Bond Aggregate ETF (SCHZ) and BNDX are one of the best bond ETFs.
 

     - Currency ETF:

Currency ETFs track various currency indexes of foreign countries. Currency ETFs are used as protection against currency changes. It tracks the performance of currencies of different countries against the U.S dollar. Some of the top listed currency ETFs are UUP, FXE, FXY, etc.
 

     - Real estate ETF:

Real estate funds invest in good-quality real estates. They do it either directly or through real estate managers. Examples are Vanguard Real Estate ETF (VNQ), Schwab U.S. REIT ETF (SCHH), etc.
 

     - Leveraged ETF:

Leveraged ETFs are kind of boosting ETF. They are either double leveraged ETFs or triple leveraged ETFs that double or triple the amount. But the catch is that they double or triple the loss as well. Some of the best leverage ETFs are ProShares Ultra VIX Short-Term Futures ETF, ProShares Ultra Bloomberg Crude Oil ETF, ProShares UltraShort QQQ ETF and Direxion Daily S&P 500 Bear 3x Shares ETF.

We hope that you have a better understanding of the types of ETs, and can choose better.

 

     - Foreign market ETF:

Foreign market ETFs simply track a market index of foreign companies outside the investor’s own country. For example, Lyxor FTSE 100 MIB UCITS ETF that tracks the equity index for the Italian market, EWJ which tracks Japan’s Nikkei Index.