What is an ETF? Exchange Traded Fund

ETF , the full English name is Exchange Traded Fund , and it is called “index stock fund” in Chinese.

An ETF is essentially a security that tracks an index, sector , commodity , or other asset and can be traded on a stock exchange like ordinary stocks.

As an emerging investment method, ETF combines the flexible trading of stocks with the diversified portfolio of mutual funds , and has become an increasingly popular investment option.

How do ETFs work?

ETF providers, such as BlackRock, Vanguard, and State Street, package a basket of stocks, funds, or other financial products into a fund and design it in the form of a trust to track the performance of these assets and set a corresponding index.

This fund is then divided into ETF shares and bought and sold on the stock market just like stocks.

The supply of ETF shares is regulated through a mechanism of “creation” and “redemption” that is performed by large professional investment firms called “authorized participants,” such as JPMorgan Chase and Merrill Lynch.

In all transactions, the ETF provider holds the underlying assets, while the investor (ETF Buyer) owns a portion of the ETF shares but does not directly hold the underlying assets of the fund.

How did ETFs develop?

ETFs were created to combine the convenience of stock trading with the diversified options of mutual funds .

The earliest ETF was launched in the United States in 1993 and was called “Standard & Poor’s Depositary Receipts” (SPDRs). Its purpose was to provide an investment tool that could be traded in real time on the exchange while having the diversified investment characteristics of a fund.

ETFs can be structured in a variety of ways, from tracking a single commodity price to a diversified portfolio of a large number of different securities or even a specific investment strategy. They are not limited to the U.S. market but can invest globally.

The price of ETFs fluctuates in real time with market transactions, and investors can buy and sell them at any time during trading hours. This is significantly different from traditional mutual funds that can only be traded after the market closes every day.

What are the characteristics of ETFs?

ETFs have great advantages, such as low cost and diversification; they also have certain disadvantages, such as insufficient liquidity, etc.

Advantages of ETFs

low cost

Compared to mutual funds, ETFs charge very low annual fees. For example, the annual fee of the S&P 500 Index Fund (SPY) is only 0.09%, while VOO is even lower, at only 0.03%.

Of course, there are also many ETFs with higher fees, such as GDX, which is 0.52%. There are also some short-selling ETFs, such as SQQQ and SPDN, which also charge higher fees.

In comparison, mutual funds charge many fees, such as management fees (0.25%~1.5%), commissions for buying and selling fund shares, and other fees.

Note that ETFs do not charge separate management fees, as the fees of ETFs are already embedded in the price of the ETFs. Mutual fund fees, on the other hand, are charged separately.

When investing in ETFs, investors only need to execute one buy transaction and one sell transaction, eliminating the commissions and transaction fees of multiple transactions. Some brokers even offer commission-free trading on certain low-cost ETFs, further reducing investment costs.

Diversification of investments

Through ETFs, you can not only make a one-time investment in most stocks in the same industry or field, but you can even invest across industries and countries.

For example, by investing in SPY, you can invest in 500 US listed companies at one time, and through IWM, you can invest in approximately 1,950 small US companies at one time.

A diversified investment model greatly reduces the risk that you might take when investing in a single company.

Of course, based on the personal interests of investors, there are also ETFs that focus on a specific industry. For example, XLF focuses on listed companies in the US financial industry, and XLE focuses on listed companies in the US energy industry.

Transparency

ETFs are known for their high transparency. Investors can easily access ETF price dynamics, which are updated in real time on the exchange.

In addition, ETF holdings are disclosed to the public on a daily basis, allowing investors to gain detailed insight into the fund’s specific composition and changes.

In contrast, mutual funds are relatively weak in terms of transparency. Most mutual funds typically disclose their holdings to investors only on a monthly or quarterly basis. This long disclosure cycle may lead to information lags, making it difficult for investors to keep up to date with the latest developments and risk exposures of the fund.

Low taxes

ETFs are known for their tax efficiency, offering different tax advantages than mutual funds, where investors may have to pay taxes on capital gains during their investment period, which often come from the fund manager’s trading activities.

In an ETF, investors generally only pay capital gains tax when they eventually sell their ETF shares. This asset redistribution mechanism allows ETFs to manage internal transactions more flexibly, thereby reducing the frequency of capital gains tax triggers.

Disadvantages

Insufficient liquidity

As with any security, investors are influenced by the current market price when selling.

When the market is volatile, a large sell-off of a single stock will have a greater impact on the ETFs sold as a basket. Therefore, it is more advantageous to invest in popular ETFs with better liquidity because it is easier to buy and sell.

ETF Closure Risk

When an ETF does not have enough assets to cover operating expenses or management costs, the fund company may decide to close the ETF.

When it closes, the fund company sells all of the assets held by the ETF and returns the proceeds to investors.

What are the different types of ETFs?

ETFs can be classified according to their management methods and the types of investment targets.

1. Classification by management method

Passively Managed ETFs

Passively managed ETFs are a more traditional way of managing ETFs. They usually track a specific benchmark asset, and the fund manager does not adjust the investment proportions of the fund every day.

The transaction costs required are lower than those of actively managed ETFs, and the returns obtained are stable, but they may not necessarily meet the return goals of active investors.

Actively managed ETFs

Actively managed ETFs refer to an investment management method in which investors actively manage a portfolio of stocks, participate more in buying and selling stocks, and change holdings within the ETF.

It emerged after passively managed ETFs, giving investors more stock portfolio options and allowing active investors to choose investments more freely based on their own judgment.

Compared with passively managed ETFs, active management may achieve higher returns, but at the same time, it will also generate higher transaction fees, management fees, etc. due to high turnover rates.

2. Classification by investment target

• Bond ETFs: include U.S. Treasury bonds, state bonds, municipal bonds, and corporate bonds;
• Commodity ETFs: investments in physical commodities including crude oil , natural gas or gold;
• Currency ETF: including currencies of various countries, such as Canadian dollar, Euro, Japanese yen, etc.;
• Stock ETF: including stocks, funds, etc.;
• Industry ETFs: Track specific industries based on the 11 sectors of the U.S. stock market, including healthcare, finance, industry, information technology, and real estate. Each sector is composed of companies operating within that sector. Industry ETFs provide a portfolio investment in stocks of different companies in a specific industry, or a cross-industry portfolio investment.
• International ETFs: ETFs that focus on all economies outside the United States, including developed markets, emerging markets, etc.

There are also some new and exotic ETFs, such as cybersecurity ETFs and ETFs focused on smartphones.

What is the difference between ETFs, stocks and mutual funds?

The Difference Between ETFs and Stocks

The biggest difference between ETF and stock trading is that it holds a “basket” of stocks.

Compared to buying different individual stocks separately, ETFs sold as a “basket” can significantly reduce expenses in terms of transaction fees and broker commissions.

Since there are multiple assets in ETFs and they are not limited to the same industry or country, they can meet the needs of investors to diversify their investments and make more diversified portfolio investments.

The Difference Between ETFs and Mutual Funds

The biggest difference between ETFs and mutual funds is that ETFs can be traded on stock exchanges and have the same flexible trading process as stocks, but are more cost-effective and liquid.

Management fees are also one of the advantages of ETFs. Data from 2019 showed that the average annual management fee for stock mutual funds was 0.52%, while the average fee for ETFs was 0.18%.

When trading for the first time, ETFs have significantly lower minimum investment requirements than mutual funds.

What are some common ETFs?

Index ETFs

ITEM	ETF [fees]	ETF Introduction
S&P 500	SPY SPDR S&P 500 ETF Trust [0.09%]	SPY tracks a market-cap-weighted index of U.S. large- and mid-cap stocks selected by an S&P committee.
	UPRO ProShares UltraPro S&P500 (+3X,1 Day) [0.91%]	UPRO provides 3x leveraged daily returns and tracks a market capitalization-weighted index of U.S. large- and mid-cap companies selected by an S&P committee.
	IVV iShares Core S&P 500 ETF [0.03%]	IVV tracks a market-cap-weighted index of U.S. large- and mid-cap stocks selected by an S&P committee, similar to SPY.
Nasdaq Index	QQQ Invesco QQQ Trust [0.2%]	QQQ tracks a modified market-cap-weighted index of 100 Nasdaq-listed stocks.
	TQQQ ProShares UltraPro QQQ [0.86%]	TQQQ provides 3x leveraged investment returns and tracks a modified market capitalization-weighted index of the largest 100 non-financial companies listed on NASDAQ.
Dow Jones Index	DIA SPDR Dow Jones Industrial Average ETF Trust 0.16%	DIA tracks a price-weighted index of 30 large-cap U.S. stocks selected by the editors of The Wall Street Journal.
	UDOW ProShares UltraPro Dow30 0.95%	UDOW provides 3x leveraged investment returns and tracks the price-weighted Dow Jones Industrial Average, which consists of 30 of the largest U.S. companies.
Large, medium and small market capitalization company index	OEF iShares S&P 100 ETF 0.2%	OEF tracks a market capitalization-weighted index of 100 large U.S. companies selected by a committee of Standard & Poor’s.
	MDY SPDR S&P Midcap 400 ETF Trust 0.23%	MDY tracks a market-cap-weighted index of U.S. mid-cap companies.
	SLY SPDR S&P 600 Small Cap ETF 0.15%	SLY tracks a market-cap-weighted index of U.S. small-cap stocks selected by the S&P committee.
Russell Index	IWB iShares Russell 1000 ETF 0.15%	IIWB tracks a market-cap-weighted index of the 1,000 largest U.S. companies.
	IWM iShares Russell 2000 ETF 0.19%	IWM tracks a market-cap-weighted index of U.S. small-cap stocks ranked between 1,001 and 3,000 by market capitalization.
	IWV iShares Russell 3000 ETF 0.2%	IWV tracks the performance of the Russell 3000 Index, which represents the investable U.S. equity market and includes the largest 3,000 U.S. companies by market capitalization.

Industry ETFs

ETF [fees]	ETF Introduction
XLE Energy Select Sector SPDR Fund [0.1%]	XLE tracks a market-cap-weighted index of U.S. energy companies in the S&P 500.
XLK Technology Select Sector SPDR Fund [0.1%]	XLK tracks an index composed of technology stocks in the S&P 500.
XLP Consumer Staples Select Sector SPDR Fund [0.1%]	XLP tracks a market-cap-weighted index of consumer staples stocks in the S&P 500.
XLV Health Care Select Sector SPDR Fund [0.1%]	XLV tracks the healthcare stocks in the S&P 500 and is weighted by market capitalization.
XLB Materials Select Sector SPDR Fund [0.1%]	XLB tracks a market-cap-weighted index of U.S. basic materials companies. The fund includes only materials stocks in the S&P 500.
XLY Consumer Discretionary Select Sector SPDR Fund [0.1%]	XLY tracks a market-cap-weighted index of consumer-sector stocks in the S&P 500.
XRT SPDR S&P Retail ETF [0.35%]	XRT tracks a broad, equal-weighted index of U.S. retail industry stocks.
XLC Communication Services Select Sector SPDR Fund [0.1%]	XLC tracks a market-cap-weighted index of U.S. telecommunications and media & entertainment companies in the S&P 500.
XLI Industrial Select Sector SPDR Fund [0.1%]	The XLI tracks a market-cap-weighted index composed of industrial sector stocks in the S&P 500.
XLRE Real Estate Select Sector SPDR Fund [0.1%]	XLRE tracks a market-cap-weighted index of real estate investment trusts (REITs) and real estate stocks in the S&P 500, excluding mortgage REITs.
XLF Financial Select Sector SPDR Fund [0.1%]	XLF tracks a market-cap-weighted index of financial stocks in the S&P 500.

U.S. Treasury ETFs

ETF [fees]	ETF Introduction
TLT iShares 20+ Year Treasury Bond ETF [0.15%]	TLT tracks a market-cap-weighted index of debt issued by the U.S. Treasury with a remaining maturity of 20 years or more.
IEF iShares 7-10 Year Treasury Bond ETF [0.15%]	The IEF tracks a market-cap-weighted index of debt issued by the U.S. Treasury with remaining maturities of seven to 10 years, excluding Treasury STRIPS.
SHY iShares 1-3 Year Treasury Bond ETF [0.15%]	SHY tracks a market capitalization-weighted index of debt issued by the U.S. Treasury with remaining maturities of one to three years, excluding Treasury STRIPS.
TIP iShares TIPS Bond ETF [0.19%]	TIP tracks a market-cap-weighted index composed of U.S. Treasury Inflation-Protected Securities (TIPS) issued by the U.S. Treasury that have a remaining maturity of at least one year.
MUB iShares National Muni Bond ETF [0.07%]	MUB tracks the investment results of an index comprised of investment-grade U.S. municipal bonds. Municipal bonds, commonly referred to as “munis,” are debt securities issued by states, cities, counties and other government entities to finance public projects such as schools, roads and hospitals.
EDV Vanguard Extended Duration Treasury ETF [0.06%]	The fund is passively managed and seeks to hold a group of 20- to 30-year Treasury STRIPS, which represent individual interest or principal payments on U.S. Treasury bonds broken down into separately tradable components.
TMF Direxion Daily 20+ Year Treasury Bull 3X Shares [1.06%]	The TMF provides a 3x daily return on investment and tracks a market-cap-weighted index of U.S. Treasury bonds with remaining maturities greater than 20 years.

Commodity ETFs

ITEM	ETF [fees]	ETF Introduction
gold	GLD SPDR Gold Trust [0.4%]	GLD tracks the spot price of gold, net of fees and liabilities, and does so using gold bars stored in vaults in London.
	GDX VanEck Gold Miners ETF [0.51%]	GDX tracks the performance of the NYSE Arca Gold Miners Index, which includes the world’s major gold mining companies.
silver	SLV iShares Silver Trust [0.5%]	SLV tracks the spot price of silver by holding physical silver bars.
	AGQ ProShares Ultra Silver [1.5%]	Through the use of financial derivatives such as futures contracts and swaps, ACG seeks to provide an investment return that is leveraged twice (2x) to the daily movement of the spot price of silver.
Platinum	PPLT abrdn Physical Platinum Shares ETF [0.6%]	PPLT tracks the spot price of platinum by holding physical platinum.
	PLTM GraniteShares Platinum Trust [0.5%]	PLTM tracks the spot price of platinum by holding physical platinum, similar to PPLT.
Palladium	PALL Aberdeen Standard Physical Palladium Shares ETF [0.6%]	PALL tracks the spot price of palladium by holding physical palladium.
copper	CPER United States Copper Index Fund [0.85%]	CPER tracks a rules-based index of copper futures contracts that are selected based on the shape of the copper futures curve.
oil	BNO United States Brent Oil Fund LP [1.02%]	BNO tracks the daily changes in the price of Brent crude oil by holding crude oil futures contracts.
	USO United States Oil Fund LP [0.81%]	USO tracks the daily changes in the price of West Texas Intermediate (WTI) crude oil by holding crude oil futures contracts.
	USL United States 12 Month Oil Fund LP [0.90%]	USL tracks the daily changes in West Texas Intermediate (WTI) crude oil by holding crude oil futures contracts, but using a longer-term 12-month rolling period strategy.
	UCO ProShares Ultra Bloomberg Crude Oil [1.62%]	UCO aims to provide an investment return that is twice (2x) the daily performance of Brent crude oil futures prices. UCO uses a leveraged strategy to amplify daily fluctuations in crude oil prices by holding and managing crude oil futures contracts.
	DBO Invesco DB Oil Fund [0.76%]	DBO tracks daily changes in light crude oil prices by holding crude oil futures contracts.
gasoline	UGA United States Gasoline Fund LP [0.93%]	UGA holds the front-month NYMEX Reconstituted Gasoline Blend for Oxygen Blending (RBOB) gasoline futures contract.
natural gas	UNG United States Natural Gas Fund LP [1.11%]	UNG tracks natural gas futures prices by holding front-month natural gas futures contracts and swaps.
	UNL United States 12 Month Natural Gas Fund LP [0.9%]	UNL tracks daily changes in natural gas prices by holding natural gas futures contracts that span 12 months.
corn	CORN Teucrium Corn Fund [1.14%]	CORN tracks an index composed of corn futures contracts, reflecting the market performance of corn by holding corn futures contracts with three different expiration dates on the Chicago Board of Trade (CBOT).
Commodities	GSG iShares S&P GSCI Commodity Indexed Trust [0.75%]	GSG uses index futures contracts to track the S&P Goldman Sachs Commodity Index (S&P GSCI), an index that includes a number of different commodities, weighted by production.
	DBC Invesco DB Commodity Index Tracking Fund [0.87%]	DBC tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, which reflects the performance of a basket of diversified commodity futures contracts.
	USCI United States Commodity Index Fund [1.01%]	USCI tracks the SummerHaven Dynamic Commodity Index Total Return and focuses on a broad range of commodities by holding various commodity futures contracts.
	CMDY iShares Bloomberg Roll Select Commodity Strategy ETF [0.28%]	CMDY tracks the Bloomberg Roll Select Commodity Index, which holds futures contracts on a broad market commodity index and optimizes roll costs.
	COM Direxion Auspice Broad Commodity Strategy ETF [0.81%]	COM tracks the Bloomberg Commodity Index, which includes futures contracts on 23 physical commodities, covering a wide range of sectors including energy, grains, industrial metals, precious metals and livestock products.
	CCRV iShares Commodity Curve Carry Strategy ETF [0.4%]	CCRV tracks the ICE BofA Commodity Enhanced Carry Index, which is composed of various commodity futures contracts selected based on positive roll yield.
	BCD abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF	BCD BCD tracks the Bloomberg Commodity Index 3 Month Forward Index, which covers a variety of commodity markets including energy, metals and agricultural products.
agriculture	DBA Invesco DB Agriculture Fund [0.91%]	The index tracked by DBA covers 10 agricultural futures contracts, including grains, oilseeds, sugar and coffee.
energy	DBE Invesco DB Energy Fund [0.77%]	The index tracked by DBE covers five energy-related futures contracts, typically crude oil, natural gas, heating oil, gasoline and Brent crude.
	RENW Harbor Energy Transition Strategy ETF [0.8%]	The Quantix Energy Transition Index tracked by REWN includes a variety of commodities related to the low-carbon and renewable energy transition. The index covers at least 10 different commodities, such as metals (copper, lithium, etc.), energy (natural gas, etc.) and agricultural products.
Metal	XME SPDR S&P Metals & Mining ETF [0.35%]	XME tracks the performance of the S&P Metals & Mining Select Industry Index. This ETF includes a broad range of companies involved in the mining and production of metals and minerals.
	DBB Invesco DB Base Metals Fund [0.77%]	DBB tracks the DBIQ Optimum Yield Industrial Metals Index, which holds futures contracts on base metals, including aluminum, zinc and copper.
	DBP Invesco DB Precious Metals Fund [0.75%]	DBP tracks the DBIQ Optimum Yield Precious Metals Index, which reflects the market performance of precious metals such as gold and silver by holding precious metals futures contracts.
	GLTR abrdn Physical Precious Metals Basket Shares ETF 0.6%	GLTR tracks the performance of a basket of physical precious metals through its precious metal holdings, specifically gold, silver, platinum and palladium.
sugar	CANE Teucrium Sugar Fund [1.14%]	CANE tracks daily changes in the price of sugar futures contracts by holding sugar futures contracts with different expiration dates.
Soybean	SOYB Teucrium Soybean Fund [1.91%]	SOYB tracks daily changes in soybean prices by holding soybean futures contracts.
wheat	WEAT Teucrium Wheat Fund [1.14%]	Track daily changes in wheat prices by holding wheat futures contracts.

Currency ETFs

ETF [fees]	ETF Introduction
UUP Invesco DB US Dollar Index Bullish Fund [0.78%]	Track the changing value of the U.S. dollar relative to a basket of global currencies by holding USDX futures contracts.
FXA Invesco CurrencyShares Australian Dollar Trust [0.4%]	FXA tracks the changes in the value of the Australian Dollar (AUD) relative to the U.S. Dollar (USD).
FXB Invesco CurrencyShares British Pound Sterling Trust [0.4%]	FXB reflects the changing value of the British Pound (GBP) relative to the US Dollar (USD).
FXC Invesco CurrencyShares Canadian Dollar Trust [0.4%]	FXC tracks the changing value of the Canadian dollar (CAD) relative to the U.S. dollar (USD).
FXE Invesco CurrencyShares Euro Trust [0.4%]	FXE tracks the changing value of the Euro (EUR) relative to the U.S. Dollar (USD).
FXY Invesco CurrencyShares Japanese Yen Trust [0.4%]	FXY tracks the changing value of the Japanese Yen (JPY) relative to the U.S. Dollar (USD).
FXF Invesco CurrencyShares Swiss Franc Trust [0.4%]	FXF tracks the changing value of the Swiss Franc (CHF) relative to the US Dollar (USD).

China-related ETFs

ETF Name [Fee]	ETF Introduction
MCHI iShares MSCI China ETF [0.58%]	MCHI tracks a market capitalization-weighted index of investable Chinese stocks. The fund includes Chinese stocks of all market capitalization sizes and aims to reflect the overall performance of the Chinese stock market.
KWEB KraneShares CSI China Internet ETF [0.69%]	KWEB tracks the performance of Chinese Internet companies and primarily invests in Internet companies and Internet-related businesses operating within China.
FXI iShares Trust – China Large-Cap ETF [0.74%]	FXI tracks a market-cap-weighted index consisting of the 50 largest Chinese stocks traded on the Hong Kong exchange.
GXC SPDR S&P China ETF [0.59%]	GXC tracks an index that reflects the overall performance of the Chinese stock market and invests in stocks of Chinese companies listed both in China and overseas.
CQQQ Invesco China Technology ETF [0.7%]	CQQQ tracks a market-cap-weighted Chinese technology stock index that invests primarily in Chinese technology company stocks listed in and outside of China.
CNYA iShares MSCI China A ETF [0.6%]	CNYA tracks a market capitalization-weighted index of Chinese A-share stocks.
KBA KraneShares Bosera MSCI China A 50 Connect Index ETF [0.56%]	KBA tracks a market-cap-weighted subset of Chinese large- and mid-cap stocks listed in Shanghai and Shenzhen.

A detailed introduction to several ETFs

SPY

• Full name: SPDR S&P 500 ETF Trust
• Released: January 22, 1993
• Issuer: State Street Global Advisors
• Annual Fee: 0.09%
• Major stocks: 500 to 502 stocks selected from NYSE and NASDAQ
• Funding size: $387B (March 2022)
• Daily trading volume: $47B (March 2022)
• MSCI Rating: A (March 2022)

SPY is the world’s first ETF, listed on January 22, 1993. It is an ETF used to track the S&P 500 index and is also one of the most traded ETFs currently.

The top ten stocks with the highest percentage of SPY holdings are as follows, with a total share of 27.88% :

• Apple Inc. (AAPL) – 7.52%
• Microsoft Corporation (MSFT) – 6.86%
• Amazon.com Inc. (AMZN) – 2.92%
• NVIDIA Corporation (NVDA) – 2.87%
• Meta Platforms Inc. (META) – 1.88%
• Alphabet Inc. Class A (GOOGL) – 2.37%
• Alphabet Inc. Class C (GOOG) – 1.98%
• Broadcom Inc. (AVGO) – 1.60%
• Eli Lilly and Co. (LLY) – 1.58%
• Berkshire Hathaway Inc. Class B (BRK.B) – 1.58%

If you are new to investing but want to profit from the stock market, buying SPY directly may be your best option.

Buffett once said at the 2021 “Answering Shareholders’ Meeting”:

But for a given individual, particularly my wife , I just think that having a tiny fraction, which is all it takes for her to do very well for the rest of her life, I just– I think that the best thing to do is buy 90% in an S&P 500 index fund . Now, the index fund people naturally have started over the time, they market more– more and more products that go to other indices and everything.

QQQ

• Full name: Invesco QQQ Trust ETF
• Released on: March 10, 1999
• Publisher: Invesco
• Annual fee: 0.2%
• Major stocks: 100 to 103 stocks in the non-financial sector of Nasdaq, mainly technology stocks
• Fund size: $174 B (March 2022)
• Daily trading volume: $27 B (March 2022)
• MSCI Rating: AA (March 2022)

Invesco QQQ Trus t only owns non-financial Nasdaq stocks. The top ten stocks with the highest holdings are as follows, accounting for 52.03% of the total :

• Apple (12.63%)
• Microsoft (10.12%)
• Amazon (6.74%)
• Tesla (4.05%)
• Google-C (3.95%)
• Google-A (3.74%)
• NVIDIA (3.70%)
• Meta (3.30%)
• Broadcom (1.92%)
• Costco (1.88%)

These high-tech companies make this a highly tech-heavy ETF and one of the largest ETFs out there, so it has very good liquidity.

VOO

• Full name: Vanguard S&P 500 ETF
• Release time: September 7, 2010
• Issuer: Vanguard
• Annual fee: 0.03%
• Major stocks: NYSE and NASDAQ selected 500 to 508 stocks
• Fund size: $267 B (March 2022)
• Daily trading volume: $3.7 B (March 2022)
• MSCI Rating: AA (March 2022)

The Vanguard S&P 500 ETF tracks the S&P 500 Index, which is very similar to the SPY, but the 500 stocks included are slightly different, but VOO has a lower management fee (0.03%, vs. SPY’s 0.09%).

However, if we look at the size and daily trading volume, SPY is more popular than VOO.

VOO was launched by Vanguard, one of the leaders in low-cost ETF investing, which itself has hundreds of billions in assets. The fund was opened in 2010.

IWM

• Full name: iShares Russell 2000 ETF
• Release time: May 22, 2000
• Issuer: iShares (part of BlackRock)
• Annual Fee: 0.19%
• Tracks: Russell 2000 Index, which includes about 2,000 small-cap companies.
• Fund size: $62.97 B (April 2024)
• Daily trading volume: $34M (April 2024)
• MSCI Rating: BBB (April 2024)

IWM is an ETF issued by BlackRock’s iShares that tracks the Russell 2000 Index, which includes approximately 2,000 small-cap companies.

The top ten companies in which IWM holds the largest stakes are listed below:

• Ovintiv Inc. (OVV) – 0.44%
• ShockWave Medical Inc. (SWAV) – 0.34%
• Axon Enterprise Inc. (AXON) – 0.33%
• Celsius Holdings Inc. (CELH) – 0.31%
• Tandem Diabetes Care Inc. (TNDM) – 0.31%
• Insulet Corporation (PODD) – 0.31%
• SPS Commerce Inc. (SPSC) – 0.30%
• Blueprint Medicines Corporation (BPMC) – 0.30%
• The Ensign Group Inc. (ENSG) – 0.29%
• Lantheus Holdings Inc. (LNTH) – 0.29%

SOXX

• Full name: iShares Semiconductor ETF
• Release time : July 10, 2001
• Issuer : iShares
• Annual fee : 0.35%
• Tracking Index : ICE Semiconductor Index
• Fund size : $12.77 billion (as of April 2024)

SOXX primarily invests in companies in the semiconductor industry, and its holdings include major semiconductor companies such as Broadcom, NVIDIA, Advanced Micro Devices, and Applied Materials.

The top ten companies in which SOXX holds the largest stake are listed below:

• Broadcom (AVGO) – 9.41%
• NVIDIA (NVDA) – 8.43%
• Advanced Micro Devices (AMD) – 7.56%
• Applied Materials (AMAT) – 6.56%
• QUALCOMM (QCOM) – 5.86%
• Lam Research (LRCX) – 4.28%
• Taiwan Semiconductor Manufacturing (TSM) – 4.14%
• KLA (KLAC) – 4.13%
• Micron Technology (MU) – 3.86%
• Marvell Technology (MRVL) – 3.85%

GLD

• Release time : November 18, 2004
• Issuer : SPDR (State Street Global Advisors)
• Annual fee : 0.40%
• Track : LBMA Gold Price PM
• Funding size : Approximately US$60 billion (as of 2024)
• Daily trading volume : Approximately 5.17 million shares

GLD tracks gold prices mainly by holding physical gold, and is an important tool for investors seeking risk aversion and diversified investments. Its trading is as convenient and flexible as stocks, and it has a high degree of transparency and liquidity.

GDX

• Full name: VanEck Gold Miners ETF
• Release time: May 16, 2006
• Publisher: VanEck
• Annual fee: 0.51%
• Track: NYSE Arca Gold Miners Index (GDMNTR)
• Fund size: $15.6 B (March 2022)
• Daily trading volume: $770M (March 2022)
• MSCI Rating: AAA (March 2022)

The VanEck Vector Gold Miners ETF is one of the largest gold miners ETFs, with GDX investing primarily in the world’s leading gold mining companies, including companies from Canada, the United States, Australia, and South Africa.

The top ten stocks with the highest proportion of GDX holdings are as follows, with a total share of 69.01% :

• Newmont Corporation (17.45%)
• Barrick Gold Corporation (12.43%)
• Franco-Nevada Corporation (8.79%)
• Agnico Eagle Mines Limited (7.43%)
• Wheaton Precious Metals Corp (6.06%)
• Newcrest Mining Limited (4.63%)
• Gold Fields Limited Sponsored ADR (4.00%)
• AngloGold Ashanti Limited Sponsored ADR (3.00%)
• Northern Star Resources Ltd (2.63%)
• Zijin Mining Group Co., Ltd. Class H2 (0.58%)

VIXY

• Full name: ProShares VIX Short-Term Futures ETF
• Release time: January 3, 2011
• Issuer: ProShares
• Annual fee: 0.85%
• Track: S&P 500 VIX Short-Term Futures Index
• Fund size: $407 M (March 2022)
• Daily trading volume: $180M (March 2022)

The ProShares VIX Short-Term Futures ETF is one of the relatively unique members of the ETF universe because it allows investors to profit from market volatility.

If volatility moves higher, the ETF will increase in value, usually moving in the opposite direction of the stock market.

However, because it must regularly fulfill derivative contracts, which consumes own funds over time, it is only suitable as a short-term investment.

IEO

• Full name: iShares US Oil & Gas Exploration & Production ETF
• Release time: May 1, 2006
• Publisher: Blackrock
• Annual fee: 0.39%
• Top Stocks: 50 Dow Jones US Oil and Gas Company Stocks
• Fund size: $720M (March 2022)
• Daily trading volume: $17.5M (March 2022)
• MSCI Rating: AA (March 2022)

Stocks tracked by IEO include ConocoPhillips (COP) and EOG Resources (EOG), which together account for more than 25% of the portfolio.

The top ten stocks with the highest IEO holdings are as follows, with a total share of 68.65% :

• ConocoPhillips (18.76%)
• EOG Resources, Inc. (9.85%)
• Pioneer Natural Resources Company (7.77%)
• Marathon Petroleum Corporation (6.79%)
• Devon Energy Corporation (4.65%)
• Cheniere Energy, Inc. (4.64%)
• Valero Energy Corporation (4.27%)
• Hess Corporation (4.24%)
• Phillips 66 (4.12%)
• Diamondback Energy, Inc. (3.56%)

R

• Full name: Invesco S&P SmallCap 600 Revenue ETF
• Release time: February 22, 2008
• Publisher: Invesco
• Annual fee: 0.39%
• Major stocks: Dow Jones SmallCap 600 Index
• Fund size: $760 M (March 2022)
• Daily trading volume: $7.5M (March 2022)
• MSCI Rating: A (March 2022)

The Invesco S&P SmallCap 600 Revenue ETF is comprised of the Dow Jones SmallCap 600, an index of 600 small-cap stocks, and then weights the stocks based on their revenue, with a single position weighting capped at 5%.

RWJ’s top ten holdings are as follows, with a total of 68.65% of the shares:

• PBF Energy, Inc. Class A (3.97%)
• World Fuel Services Corporation (2.93%)
• United Natural Foods, Inc. (2.36%)
• Andersons, Inc. (1.73%)
• Group 1 Automotive, Inc. (1.37%)
• Sonic Automotive, Inc. Class A (1.35%)
• SpartanNash Company (1.33%)
• Bed Bath & Beyond Inc. (1.27%)
• Asbury Automotive Group, Inc. (1.16%)
• Community Health Systems, Inc. (1.16%)

VEU

• Full name: Vanguard FTSE All-World ex-US ETF
• Release time: March 2, 2007
• Publisher: Vanguard
• Annual fee: 0.07%
• Major stocks: Large and mid-cap non-U.S. stocks (3,315 stocks)
• Fund size: $32 B (March 2022)
• Daily trading volume: $375M (March 2022)
• MSCI Rating: AA (March 2022)

Vanguard FTSE All-World ex-US ETF is an ETF suitable for global investment. The index includes stocks of approximately 2,200 companies from 46 countries around the world, covering both developed and emerging markets.

Its holdings include Alibaba (BABA) and Swiss pharmaceutical company Novartis (NVS). But those are all companies “outside the U.S.,” not U.S. companies.

Frequently asked questions

Question 1: What does ETF mean?

ETF stands for Exchange Traded Fund, which is called “index stock fund” in Chinese. Its main purpose is to combine the convenience of stock trading with the diversified choices of mutual funds trading, so as to provide investors with better investment options.

Question 2: What is crude oil ETF?

Crude oil ETF is a commodity ETF, which is an ETF based on crude oil futures or oil company stocks as financial products.

Question 3: What is gold ETF?

Gold ETF is an ETF that uses gold prices as its investment target.

Question 4: What does Nasdaq ETF mean?

The Nasdaq ETF is an ETF that tracks the Nasdaq 100 Index of U.S. stocks.