Exchange Traded Funds
Exchange traded funds (ETFs) is a type of pooled investment security that operates much like a mutual fund.
What is Exchanged Trraded Funds?
Exchange traded funds (ETFs) is a type of pooled investment security that operates much like a mutual fund.
Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.
An ETF holds multiple underlying assets, rather than only one like a stock does.
An ETF can own hundreds or thousands of stocks across various industries, or it could be isolated to one particular industry or sector.
- An exchange-traded fund (ETF) is a basket of securities that trades on an exchange just like a stock does.
- ETF share prices fluctuate all day as the ETF is bought and sold; this is different from mutual funds, which only trade once a day after the market closes.
- ETFs can contain all types of investments, including stocks, commodities, or bonds; some offer U.S.-only holdings, while others are international.
- ETFs offer low expense ratios and fewer broker commissions than buying the stocks individually.
The price of an ETF’s shares will change throughout the trading day as the shares are bought and sold on the market. This is unlike mutual funds, which are not traded on an exchange, and which trade only once per day after the markets close. Additionally, ETFs tend to be more cost-effective and more liquid compared to mutual funds.
What are the benefits?
- Access to many stocks across various industries
- Low expense ratios and fewer broker commissions
- Risk management through diversification
- ETFs exist that focus on targeted industries
What should I be thinking about?
- Actively managed ETFs have higher fees
- Single-industry-focused ETFs limit diversification
- Lack of liquidity hinders transactions
Important information regarding this information
This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.
Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733), and their representatives make no representation as to its accuracy or completeness.
Published: July 2025.
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