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1. Shard Calculation

Query:

Response:

Calculated Shard: 93 (from laksa112)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa093.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.fidelity.com/learning-center/smart-money/what-are-etfs\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.fidelity.com/learning-center/smart-money/what-are-etfs\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs","crawl_time":1775995323,"first_indexed_time":1730416977,"http_code":200,"src_unparsed":"com,fidelity!www,\/learning-center\/smart-money\/what-are-etfs s443","src_root_hash":"17952695050214760493","history_drop_reason":null,"meta_title":"What is an ETF? | Fidelity","meta_descriptions":["Exchange traded funds (ETFs) can help you score a diversified investment. Learn more about ETFs, how they work, and how you can invest in ETFs."],"attrs_boilerpipe_text":"Exchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs.\nWhat is an ETF?\nAn ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S&P 500\n®\n1\nor Nasdaq composite index.\n2\nUnlike\nmutual funds,\nETFs trade on exchanges just like\nstocks\n, and their price changes throughout the day, providing liquidity and flexibility.\nHow do ETFs work?\nETFs have become popular with investors in large part because they can provide a way to buy a potentially\ndiversified\ninvestment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk.\nYou can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA.\nTypes of ETFs\nThe ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs:\nIndex ETFs\ntrack a market index, such as the S&P 500\n®\nor Nasdaq composite.\nActively managed ETFs\nare funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF.\nFixed-income ETFs\nprovide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds.\nStyle ETFs\nfocus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth.\nSector and industry ETFs\ninvest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water.\nCommodity ETFs\ntrack the price of a commodity, such as timber, oil, or gold.\nForeign market ETFs\ngive exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index.\nInverse ETFs\nprofit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives.\nLeveraged ETFs\nare considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing.\nETFs vs. mutual funds\nMutual funds and ETFs\nare similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them.\nETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close.\nAlthough only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund.\nHoldings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay.\nETFs vs. stocks\nThe main\ndifference between ETFs and stocks\nis that ETFs, depending on the fund, can potentially provide a diversified investment.\nStocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market.\nETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities.\nAdvantages of ETFs\nLower fees\nBoth ETFs and mutual funds have an \"\nexpense ratio\n,\" which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a $1,000 investment, you're paying $1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds.\n3\nEasily tradeable\nETFs are listed on public exchanges, and you can buy and sell them throughout\nmarket hours\njust like stocks. You can also see their prices change throughout the trading day in real time.\nTax efficiency\nWhen mutual funds change their holdings, any profits from selling investments are considered \"\ncapital gains\n\" and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article\nInside ETFs\n.\nDisadvantages of ETFs\nTrading costs\nThere could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade.\nLack of customization\nBecause ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities.\nPossible tracking errors\nCertain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called \"tracking error.\" Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark.\nHow to invest in ETFs\nHere are the steps for how to invest in ETFs.\n1. Open and fund an account that can trade ETFs\nMost\nbrokerage accounts\nallow you to trade ETFs, and some retirement accounts, like\nIRAs\n, do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs.\n2. Research ETFs that align with your financial goals\nBefore placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the\nFidelity ETF Screener\n), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon.\n3. Buy the ETF using the ticker\nA \"ticker\" is the short letter code associated with a given ETF—a ticker would look like \"ABCD,\" for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute.\n4. Decide when you want to sell\nIt might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about\ncreating an exit strategy\nfor any investment.","attrs_markdown":"[Skip to main content](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs#navSkipToContent)\n\n[Fidelity.com Home](https:\/\/www.fidelity.com\/)\n\n[Log in](https:\/\/digital.fidelity.com\/prgw\/digital\/login\/full-page)\n\n- [Accounts & Trade]()\n  - [Portfolio](https:\/\/digital.fidelity.com\/prgw\/digital\/login\/full-page?AuthRedUrl=https:\/\/digital.fidelity.com\/ftgw\/digital\/portfolio\/summary)\n  - [Account Positions](https:\/\/digital.fidelity.com\/ftgw\/digital\/portfolio\/positions)\n  - [Trade](https:\/\/digital.fidelity.com\/ftgw\/digital\/trade-equity\/index\/orderEntry)\n  - [Fidelity Trader+ Web](https:\/\/digital.fidelity.com\/ftgw\/digital\/trader-dashboard)\n  - [Fidelity Trader+](https:\/\/www.fidelity.com\/trading\/trading-platforms)\n  - [Transfers](https:\/\/www.fidelity.com\/customer-service\/money-movement)\n  - [Cash Management](https:\/\/digital.fidelity.com\/ftgw\/digital\/cashmanagement)\n  - 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[Documents](https:\/\/digital.fidelity.com\/ftgw\/digital\/portfolio\/documents)\n  - [Tax Forms & Information](https:\/\/www.fidelity.com\/tax-information\/overview)\n  - [Retirement Distributions](https:\/\/digital.fidelity.com\/ftgw\/digital\/mrdhub)\n  - [Refer a Friend](https:\/\/www.fidelity.com\/customer-service\/friendsandfamily3a)\n- [Investing]()\n  - [Self Directed Investing](https:\/\/www.fidelity.com\/investing\/trading)\n  - [Advanced Trading](https:\/\/www.fidelity.com\/investing\/advanced-trading)\n  - [Investing for a Child](https:\/\/www.fidelity.com\/investing\/investing-for-kids)\n  - [Managing Cash & Credit](https:\/\/www.fidelity.com\/investing\/manage-cash-credit-lending)\n  - [Investment Accounts & Products](https:\/\/www.fidelity.com\/investing\/investment-accounts)\n  - [Investing & Trading Education](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/investing-trading-education)\n- [Retirement]()\n  - [Retirement Planning](https:\/\/www.fidelity.com\/retirement\/retirement-planning)\n  - [401(k) Rollovers & IRA Transfers](https:\/\/www.fidelity.com\/retirement\/401k-rollover)\n  - [Retirement Accounts](https:\/\/www.fidelity.com\/retirement\/retirement-accounts)\n  - [Retirement Education](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/retirement-education)\n- [Wealth Management]()\n  - [Wealth Management Offerings](https:\/\/www.fidelity.com\/wealth\/wealth-management-offerings)\n  - [Financial Advisors](https:\/\/www.fidelity.com\/wealth\/financial-advisors)\n  - [Financial Planning](https:\/\/www.fidelity.com\/wealth\/financial-planning)\n  - [Investment Management](https:\/\/www.fidelity.com\/wealth\/investment-management)\n  - [Wealth Management Insights](https:\/\/www.fidelity.com\/learning-center\/wealth-management-insights)\n- [News & Research]()\n  - [News](https:\/\/www.fidelity.com\/news\/overview)\n  - [Wealth Management Insights](https:\/\/www.fidelity.com\/learning-center\/wealth-management-insights)\n  - [Watchlist](https:\/\/digital.fidelity.com\/ftgw\/digital\/watwebex)\n  - [Alerts](https:\/\/alertable.fidelity.com\/ftgw\/digital\/alerts)\n  - [Stocks, ETFs, Crypto](https:\/\/digital.fidelity.com\/prgw\/digital\/research\/src)\n  - [Mutual Funds](https:\/\/fundresearch.fidelity.com\/fund-screener)\n  - [Fixed Income, Bonds & CDs](https:\/\/fixedincome.fidelity.com\/ftgw\/fi\/FILanding)\n  - [Options](https:\/\/digital.fidelity.com\/ftgw\/digital\/options-home\/)\n  - [IPOs](https:\/\/brokerage.fidelity.com\/ftgw\/brkg\/ipo\/calendar)\n  - [Annuities](https:\/\/fundresearch.fidelity.com\/fund-screener\/annuities\/)\n  - [Learn](https:\/\/www.fidelity.com\/learning-center\/overview)\n\n## Learn\n- [Learn](https:\/\/www.fidelity.com\/learning-center\/overview)\n- [Favorites](https:\/\/www.fidelity.com\/learning-center\/favorites)\n- Topics\n  - Financial essentials\n    - [Saving and budgeting money](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/saving-and-budgeting-money \"Saving and budgeting money\")\n    - [Managing debt](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/managing-debt \"Managing debt\")\n    - [Saving for retirement](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/retirement\/saving-for-retirement \"Saving for retirement\")\n    - [Working and income](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/working-and-income \"Working and income\")\n    - [Managing health care](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/managing-health-care \"Managing health care\")\n    - [Talking to family about money](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/talking-to-family-about-money \"Talking to family about money\")\n    - [Personal finance for students](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/personal-finance-for-students \"Personal finance for students\")\n    - [Managing taxes](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/managing-taxes\/managing-taxes \"Managing taxes\")\n    - [Managing estate planning](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/managing-estate-planning \"Managing estate planning\")\n    - [Making charitable donations](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/charitable-giving\/making-charitable-donations \"Making charitable donations\")\n  - Life events\n    - [Changing jobs](https:\/\/www.fidelity.com\/learning-center\/life-events\/career-planning \"Changing jobs\")\n    - [Planning for college](https:\/\/www.fidelity.com\/learning-center\/life-events\/prepare-for-college \"Planning for college\")\n    - [Getting divorced](https:\/\/www.fidelity.com\/learning-center\/life-events\/getting-divorced \"Getting divorced\")\n    - [Becoming a parent](https:\/\/www.fidelity.com\/learning-center\/life-events\/parenting \"Becoming a parent\")\n    - [Caring for aging loved ones](https:\/\/www.fidelity.com\/learning-center\/life-events\/caring-for-the-aging \"Caring for aging loved ones\")\n    - [Marriage and partnering](https:\/\/www.fidelity.com\/learning-center\/life-events\/marriage \"Marriage and partnering\")\n    - [Buying or selling a house](https:\/\/www.fidelity.com\/learning-center\/life-events\/selling-and-buying-house \"Buying or selling a house\")\n    - [Retiring](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/retirement\/planning-your-retirement \"Retiring\")\n    - [Losing a loved one](https:\/\/www.fidelity.com\/learning-center\/life-events\/loss-of-loved-one \"Losing a loved one\")\n    - [Making a major purchase](https:\/\/www.fidelity.com\/learning-center\/life-events\/major-purchase \"Making a major purchase&#9;\")\n    - [Experiencing illness or injury](https:\/\/www.fidelity.com\/learning-center\/life-events\/injury-and-illness \"Experiencing illness or injury\")\n    - [Disabilities and special needs](https:\/\/www.fidelity.com\/learning-center\/life-events\/disabilities-and-special-needs \"Disabilities and special needs\")\n    - [Aging well](https:\/\/www.fidelity.com\/learning-center\/life-events\/aging-well \"Aging well\")\n    - [Becoming self-employed](https:\/\/www.fidelity.com\/learning-center\/life-events\/how-to-become-self-employed \"Becoming self-employed\")\n  - Investing and trading\n    - [Investing for beginners](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/investing-for-beginners \"Investing for beginners\")\n    - [Trading for beginners](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/trading-for-beginners \"Trading for beginners\")\n    - [Crypto basics](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/crypto\/crypto-for-beginners \"Crypto basics\")\n    - [Crypto: Beyond the basics](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/crypto\/crypto-advanced \"Crypto: Beyond the basics\")\n    - [Alternative investing](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/alternative-investing \"Alternative investing\")\n    - [Exploring stocks and sectors](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/finding-stocks-and-sector-ideas \"Exploring stocks and sectors\")\n    - [Investing for income](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/investing-for-income \"Investing for income\")\n    - [Analyzing stock fundamentals](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/fundamental-analysis\/analyzing-stock-fundamentals \"Analyzing stock fundamentals\")\n    - [Using technical analysis](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/technical-analysis\/using-technical-analysis \"Using technical analysis\")\n  - Investment products\n    - [ETFs](https:\/\/www.fidelity.com\/learning-center\/investment-products\/etf\/etfs \"ETFs\")\n    - [Mutual funds](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/mutual-funds \"Mutual funds \")\n    - [Stocks](https:\/\/www.fidelity.com\/learning-center\/investment-products\/stocks\/stocks \"Stocks\")\n    - [Fixed income, bonds, CDs](https:\/\/www.fidelity.com\/learning-center\/investment-products\/fixed-income-bonds\/fixed-income-bonds-cds \"Fixed income, bonds, CDs\")\n    - [Annuities](https:\/\/www.fidelity.com\/learning-center\/investment-products\/annuities \"Annuities\")\n    - [Closed-end funds](https:\/\/www.fidelity.com\/learning-center\/investment-products\/closed-end-funds\/closed-end-funds \"Closed-end funds\")\n  - Advanced trading\n    - [Using margin](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/using-margin \"Using margin\")\n    - [Options trading basics](https:\/\/www.fidelity.com\/learning-center\/investment-products\/options\/options-for-beginners \"Options trading basics\")\n    - [Options: Beyond the basics](https:\/\/www.fidelity.com\/learning-center\/investment-products\/options\/options \"Options: Beyond the basics\")\n    - [Advanced trading strategies](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/more-trading-strategies \"Advanced trading strategies\")\n    - [Using Fidelity Trader+](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/trading-platforms\/using-trader-plus \"Using Fidelity Trader+\")\n    - [Options Strategy Guide](https:\/\/www.fidelity.com\/learning-center\/investment-products\/options\/options-strategy-guide\/overview \"Options Strategy Guide\")\n    - [Technical Indicator Guide](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/technical-analysis\/technical-indicator-guide\/overview \"Technical Indicator Guide\")\n  - [Latest Market Insights](https:\/\/www.fidelity.com\/viewpoints\/market-and-economic-insights\/market-volatility-overview \"Latest Market Insights\")\n  - [Viewpoints: Expert insights](https:\/\/www.fidelity.com\/learning-center\/viewpoints \"Viewpoints: Expert insights\")\n  - [Smart Money: Tips and tactics](https:\/\/www.fidelity.com\/learning-center\/smart-money \"Smart Money: Tips and tactics\")\n  - [Money Unscripted](https:\/\/www.fidelity.com\/learning-center\/money-unscripted \"Money Unscripted\")\n  - [The Trading Post](https:\/\/www.fidelity.com\/learning-center\/trading-post \"The Trading Post\")\n  - [Women Talk Money](https:\/\/www.fidelity.com\/learning-center\/women-talk-money \"Women Talk Money\")\n  - [Wealth Management Insights](https:\/\/www.fidelity.com\/learning-center\/wealth-management-insights \"Wealth Management Insights\")\n- Events\n  - [Upcoming events](https:\/\/fidelityevents.com\/allevents\/special \"Upcoming events\")\n  - [On-demand webinars](https:\/\/www.fidelity.com\/learning-center\/events\/investing-webinars \"On-demand webinars\")\n  - [Market briefings](https:\/\/fidelityevents.com\/allevents\/filtered?hubFilter=tags|Coaching,Market%20Analysis#hub \"Market briefings\")\n  - [Market Sense](https:\/\/www.fidelity.com\/learning-center\/live-pi \"Market Sense\")\n  - [Trading Strategy Desk® coaching](https:\/\/www.fidelity.com\/learning-center\/events\/coaching-sessions \"Trading Strategy Desk® coaching\")\n  - [Trading Strategy Desk® classes](https:\/\/www.fidelity.com\/learning-center\/events\/virtual-classrooms \"Trading Strategy Desk® classes\")\n- Search\n\nOctober 30, 2025\n\n![Estimate Time](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/article\/time-clock-circle.svg)7 min\n\nSave ![](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/article\/Bookmark.svg) ![](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/article\/save-success.svg)\n\nClose Popover\n\n***\nGreat, you have saved this article to you My Learn Profile page.\n\nShare ![Share](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/article\/share.svg)\n\nClose Popover\n\n***\nWhat is an ETF? \\| Fidelity\n\nClicking a link will open a new window.\n\n- [Facebook](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs#facebook)\n- [Twitter](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs#twitter)\n- [LinkedIn](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs#linkedin)\n\n[Print ![Print](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/article\/Print.svg)](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs#print)\n\n# What is an ETF?\nLearn how ETFs work and how to invest in them.\n\nFidelity Learn\n\n![](https:\/\/www.fidelity.com\/bin-public\/600_Fidelity_Com_English\/images\/learning-center\/heros\/what-are-etfs_607874961_banner.png)\n\n### Key takeaways\n- ETF stands for exchange-traded fund.\n- ETFs contain groups of investments, such as stocks and bonds, often organized around a strategy, theme, or exposure.\n- ETFs have become popular with investors in large part because many options, like index ETFs, provide a simple way to buy a diversified investment.\n\nExchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs.\n\n### What is an ETF?\nAn ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S\\&P 500®1 or Nasdaq composite index.2 Unlike [mutual funds,](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/what-are-mutual-funds \"mutual funds,\") ETFs trade on exchanges just like [stocks](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-stocks \"stocks\"), and their price changes throughout the day, providing liquidity and flexibility.\n\n### How do ETFs work?\nETFs have become popular with investors in large part because they can provide a way to buy a potentially [diversified](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/diversification \"diversified\") investment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk.\n\nYou can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA.\n\nLoading\n\nThis could take a few moments.\n\nTo view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video.\n\nVideo Player is loading.\n\nPlay Video\n\nLoaded: 0%\n\nDuration 0:00\n\nPlay\n\nCaptions\n\n- captions settings, opens captions settings dialog\n- captions off, selected\n\nSubtitles\n\n- subtitles off, selected\n\nChapters\n\n- Chapters\n\nPlayback Rate\n\n1x\n\n- 2x\n- 1\\.75x\n- 1\\.5x\n- 1\\.25x\n- 1x\n- 0\\.75x\n- 0\\.5x\n- 0\\.25x\n\nMute\n\nFullscreen\n\nThis is a modal window.\n\nBeginning of dialog window. Escape will cancel and close the window.\n\nText\n\nColor\n\nTransparency\n\nBackground\n\nColor\n\nTransparency\n\nWindow\n\nColor\n\nTransparency\n\nFont Size\n\nText Edge Style\n\nFont Family\n\nReset restore all settings to the default values\n\nDone\n\nClose Modal Dialog\n\nEnd of dialog window.\n\n##\nRead relevant legal disclosures\n\n### Types of ETFs\nThe ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs:\n\n- **Index ETFs** track a market index, such as the S\\&P 500® or Nasdaq composite.\n- **Actively managed ETFs** are funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF.\n- **Fixed-income ETFs** provide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds.\n- **Style ETFs** focus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth.\n- **Sector and industry ETFs** invest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water.\n- **Commodity ETFs** track the price of a commodity, such as timber, oil, or gold.\n- **Foreign market ETFs** give exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index.\n- **Inverse ETFs** profit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives.\n- **Leveraged ETFs** are considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing.\n\n### ETFs vs. mutual funds\n[Mutual funds and ETFs](https:\/\/www.fidelity.com\/viewpoints\/investing-ideas\/mutual-fund-or-etf) are similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them.\n\n- ETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close.\n- Although only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund.\n- Holdings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay.\n\n### ETFs vs. stocks\nThe main [difference between ETFs and stocks](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/stocks-etfs-mutual-funds-which-is-right \"difference between ETFs and stocks\") is that ETFs, depending on the fund, can potentially provide a diversified investment.\n\n- Stocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market.\n- ETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities.\n\n### Advantages of ETFs\n**Lower fees**\n\nBoth ETFs and mutual funds have an \"[expense ratio](https:\/\/www.fidelity.com\/learning-center\/investment-products\/etf\/expense-ratio-etf \"expense ratio\"),\" which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a \\$1,000 investment, you're paying \\$1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds.3\n\n**Easily tradeable**\n\nETFs are listed on public exchanges, and you can buy and sell them throughout [market hours](https:\/\/www.fidelity.com\/learning-center\/smart-money\/stock-market-hours-and-holidays \"market hours\") just like stocks. You can also see their prices change throughout the trading day in real time.\n\n**Tax efficiency**\n\nWhen mutual funds change their holdings, any profits from selling investments are considered \"[capital gains](https:\/\/www.fidelity.com\/learning-center\/smart-money\/capital-gains-tax-rates \"capital gains\")\" and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article [Inside ETFs](https:\/\/www.fidelity.com\/viewpoints\/active-investor\/inside-etfs \"Inside ETFs\").\n\n### Disadvantages of ETFs\n**Trading costs**\n\nThere could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade.\n\n**Lack of customization**\n\nBecause ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities.\n\n**Possible tracking errors**\n\nCertain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called \"tracking error.\" Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark.\n\n### How to invest in ETFs\nHere are the steps for how to invest in ETFs.\n\n**1\\. Open and fund an account that can trade ETFs**\n\nMost [brokerage accounts](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-is-a-brokerage-account \"brokerage accounts\") allow you to trade ETFs, and some retirement accounts, like [IRAs](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-is-an-ira \"IRAs\"), do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs.\n\n**2\\. Research ETFs that align with your financial goals**\n\nBefore placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the [Fidelity ETF Screener](https:\/\/research2.fidelity.com\/fidelity\/screeners\/etf\/landing.asp \"Fidelity ETF Screener\")), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon.\n\n**3\\. Buy the ETF using the ticker**\n\nA \"ticker\" is the short letter code associated with a given ETF—a ticker would look like \"ABCD,\" for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute.\n\n**4\\. Decide when you want to sell**\n\nIt might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about [creating an exit strategy](https:\/\/www.fidelity.com\/learning-center\/smart-money\/investing-strategies \"creating an exit strategy\") for any investment.\n\n## Find the right ETF for you\nUse our screener to identify ETFs and ETPs that match your investment goals.\n\n[Screen ETFs now](https:\/\/digital.fidelity.com\/prgw\/digital\/research\/etf)\n\n## More to explore\n### [ETFs at Fidelity](https:\/\/www.fidelity.com\/etfs\/investing-in-etfs)\nLearn about Fidelity tools and resources for ETFs.\n\n### [Types of ETFs\/ETPs](https:\/\/www.fidelity.com\/learning-center\/investment-products\/etf\/etfs)\nSee which ETFs\/ETPs might be a good fit.\n\n## Subscribe to  *Fidelity Smart Money℠*\nWhat the news means for your money, plus tips to help you spend, save, and invest.\n\n### Looking for more ideas and insights?\nWe'll deliver them right to your inbox.\n\nManage subscriptions\n\n### Thanks for subscribing\\!\nCheck out your Favorites page, where you can:\n\n- Tell us the topics you want to learn more about\n- View content you've saved for later\n- Subscribe to our newsletters\n\n[Go to Favorites](https:\/\/www.fidelity.com\/learning-center\/favorites)\n\n### We're on our way, but not quite there yet\nGood news, you're on the early-access list.   \n But we're not available in your state just yet. As soon as we are, we'll let you know. In the meantime, boost your crypto brainpower in our Learning Center.\n\nManage subscriptions\n\n### Oh, hello again\\!\nGood news, you’re already on the early-access list. Keep an eye on your email for your invitation to Fidelity Crypto.\n\nManage subscriptions\n\nClose dialog\n\n### Thanks for subscribing to  Looking for more ideas and insights?   You might like these too:\n### Looking for more ideas and insights? You might like these too:\n\n### *Fidelity Viewpoints®*\nTimely news and insights from our pros on markets, investing, and personal finance.(debug tcm:2 ...\n\n### Decode Crypto\nClarity on crypto every month. Build your knowledge with education for all levels.\n\n### *Fidelity Smart Money℠*\nWhat the news means for your money, plus tips to help you spend, save, and invest.\n\n### Active Investor\nOur most advanced investment insights, strategies, and tools.\n\n### *Insights from Fidelity Wealth Management* ℠\nTimely news, events, and wealth strategies from top Fidelity thought leaders.\n\n### Women Talk Money\nReal talk and helpful tips about money, investing, and careers.\n\n### Educational Webinars and Events\nFree financial education from Fidelity and other leading industry professionals.\n\n*Fidelity Viewpoints®*\n\nTimely news and insights from our pros on markets, investing, and personal finance.(debug tcm:2 ...\n\nDecode Crypto\n\nClarity on crypto every month. Build your knowledge with education for all levels.\n\n*Fidelity Smart Money℠*\n\nWhat the news means for your money, plus tips to help you spend, save, and invest.\n\nActive Investor\n\nOur most advanced investment insights, strategies, and tools.\n\n*Insights from Fidelity Wealth Management* ℠\n\nTimely news, events, and wealth strategies from top Fidelity thought leaders.\n\nWomen Talk Money\n\nReal talk and helpful tips about money, investing, and careers.\n\nEducational Webinars and Events\n\nFree financial education from Fidelity and other leading industry professionals.\n\nDone\n\nAdd subscriptions\n\nNo, thanks.\n\nLoading\n\n- [Investing for beginners](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/investing-for-beginners)\n- [Finding stock and sector ideas](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/finding-stocks-and-sector-ideas)\n- [Investing for income](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/investing-for-income)\n- [Fixed income, bonds, CDs](https:\/\/www.fidelity.com\/learning-center\/investment-products\/fixed-income-bonds\/fixed-income-bonds-cds)\n- [Using margin](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/using-margin)\n- [Trading for beginners](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/trading-for-beginners)\n- [Advanced trading strategies](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/more-trading-strategies)\n- [ETFs](https:\/\/www.fidelity.com\/learning-center\/investment-products\/etf\/etfs)\n- [Using technical analysis](https:\/\/www.fidelity.com\/learning-center\/trading-investing\/technical-analysis\/using-technical-analysis)\n- [Mutual funds](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/mutual-funds)\n- [Stocks](https:\/\/www.fidelity.com\/learning-center\/investment-products\/stocks\/stocks)\n\n1\\.\n\n**The S\\&P 500® Index** is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.\n\n2\\. Nasdaq Composite Index is a market capitalization–weighted index that is designed to represent the performance of NASDAQ stocks.\n\n3\\.\n\nExpense ratio is the total annual fund operating expense ratio from the fund's most recent prospectus.\n\nExchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETPs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETP may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETP to another and losses may be magnified if no liquid market exists for the ETP's shares when attempting to sell them. Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.\n\n**ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses.**\n\nIn general, fixed Income ETPs carry risks similar to those of bonds, including interest rate risk (as interest rates rise bond prices usually fall, and vice versa), issuer or counterparty default risk, issuer credit risk, inflation risk and call risk. Unlike individual bonds, many fixed income ETPs do not have a maturity date, so a strategy of holding a fixed income security until maturity to try to avoid losses associated with bond price volatility is not possible with those types of ETPs. Certain fixed income ETPs may invest in lower quality debt securities that involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.\n\nBecause of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.\n\nCommodity ETPs are generally more volatile than broad-based ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply and demand relationships, interest rates, monetary and other governmental policies or factors affecting a particular sector or commodity. ETPs that track a single sector or commodity may exhibit even greater volatility. Commodity ETPs which use futures, options or other derivative instruments may involve still greater risk, and performance can deviate significantly from the spot price performance of the referenced commodity, particularly over longer holding periods.\n\nThe risk of loss in trading foreign currency can be substantial and may be magnified if trading on margin. Customers should therefore carefully consider whether such trading is suitable for them in light of their financial condition, risk tolerance and understanding of foreign markets. These risks include foreign currency risk and liquidation risk.\n\nStock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.\n\n*Investing involves risk, including risk of loss.*\n\n**Past performance is no guarantee of future results.**\n\nLeverage can magnify the impact of adverse issuer, political, regulatory, market, or economic developments on a company. In the event of bankruptcy, a company's creditors take precedence over its stockholders.\n\nThe third parties mentioned herein and Fidelity Investments are independent entities and are not legally affiliated.\n\nViews expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.\n\nFidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.\n\nThe third-party trademarks and service marks appearing herein are the property of their respective owners.\n\nFidelity Brokerage Services LLC, Member NYSE, [SIPC](https:\/\/www.sipc.org\/), 900 Salem Street, Smithfield, RI 02917\n\n© 2025 FMR LLC. 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bPJL+pkG7w4iF1IiZLyXhfbQ7pml9e3604pRtnPccfbDeIDF0v6ba\/uJ4NBrnVJRu9y\/BnOlMoqjVPDpsP3c7dAzw4SR1mWv8zQEYrcClV137yHSITjs3bAQfYYQRRhhhhBFGGAH8D9DXSGd7oPh2AAAAAElFTkSuQmCC)\n\nWelcome 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information](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-etfs)\n\n![](data:image\/png;base64,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)\n\nTo get your conversation started, type a question in the entry field or choose from one of the following popular topics and commonly asked questions.\n\n- What are smart beta ETFs?\n- Where is the money going that I contributed through the 52-week Smart Habit Challenge?\n- Do you offer any online resources or training to learn how to invest in ETFs and trade?\n\nProvide Feedback\n\nanswers will appear above the text input\n\nSubmit message\n\nPrivacy Settings\n\nWhen you visit our website, it may store or retrieve information on your browser, mostly in the form of cookies. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience on this site and the services we are able to offer.\n***\nStrictly Necessary Cookies\n\nThese cookies are necessary for this website to function and cannot be switched off in our systems. You can set your browser to block or alert you about these cookies, but if you block these cookies, some parts of the site will not work. These cookies do not store any personally identifiable information.\n***\nPerformance Cookies\n\nThese cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.\n***\nFunctional Cookies\n\nThese cookies enable the website to provide enhanced functionality and personalization. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.\n***\nTargeting or Advertising Cookies\n\nThese cookies help us present relevant online advertising and marketing messages to you, and measure the effectiveness of our advertising and marketing campaigns. These cookies may be placed on your device by us or by our third-party advertising providers. When these cookies have been placed on your device, they can be recognized by certain advertising platforms used by other websites you visit, and this allows us to present our advertisements to you on those third party websites. While targeting cookies can identify you when you visit different websites, the information collected is anonymous. They do not store personal information, but are based on uniquely identifying your browser and device. If you do not allow these cookies, our online advertisements that you see may be less relevant to you.\n***\n\nCancel\n\nSave","attrs_readable_markdown":"Exchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs.\n\n### What is an ETF?\nAn ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S\\&P 500®1 or Nasdaq composite index.2 Unlike [mutual funds,](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/what-are-mutual-funds \"mutual funds,\") ETFs trade on exchanges just like [stocks](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-are-stocks \"stocks\"), and their price changes throughout the day, providing liquidity and flexibility.\n\n### How do ETFs work?\nETFs have become popular with investors in large part because they can provide a way to buy a potentially [diversified](https:\/\/www.fidelity.com\/learning-center\/investment-products\/mutual-funds\/diversification \"diversified\") investment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk.\n\nYou can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA.\n\n### Types of ETFs\nThe ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs:\n\n- **Index ETFs** track a market index, such as the S\\&P 500® or Nasdaq composite.\n- **Actively managed ETFs** are funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF.\n- **Fixed-income ETFs** provide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds.\n- **Style ETFs** focus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth.\n- **Sector and industry ETFs** invest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water.\n- **Commodity ETFs** track the price of a commodity, such as timber, oil, or gold.\n- **Foreign market ETFs** give exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index.\n- **Inverse ETFs** profit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives.\n- **Leveraged ETFs** are considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing.\n\n### ETFs vs. mutual funds\n[Mutual funds and ETFs](https:\/\/www.fidelity.com\/viewpoints\/investing-ideas\/mutual-fund-or-etf) are similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them.\n\n- ETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close.\n- Although only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund.\n- Holdings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay.\n\n### ETFs vs. stocks\nThe main [difference between ETFs and stocks](https:\/\/www.fidelity.com\/learning-center\/personal-finance\/stocks-etfs-mutual-funds-which-is-right \"difference between ETFs and stocks\") is that ETFs, depending on the fund, can potentially provide a diversified investment.\n\n- Stocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market.\n- ETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities.\n\n### Advantages of ETFs\n**Lower fees**\n\nBoth ETFs and mutual funds have an \"[expense ratio](https:\/\/www.fidelity.com\/learning-center\/investment-products\/etf\/expense-ratio-etf \"expense ratio\"),\" which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a \\$1,000 investment, you're paying \\$1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds.3\n\n**Easily tradeable**\n\nETFs are listed on public exchanges, and you can buy and sell them throughout [market hours](https:\/\/www.fidelity.com\/learning-center\/smart-money\/stock-market-hours-and-holidays \"market hours\") just like stocks. You can also see their prices change throughout the trading day in real time.\n\n**Tax efficiency**\n\nWhen mutual funds change their holdings, any profits from selling investments are considered \"[capital gains](https:\/\/www.fidelity.com\/learning-center\/smart-money\/capital-gains-tax-rates \"capital gains\")\" and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article [Inside ETFs](https:\/\/www.fidelity.com\/viewpoints\/active-investor\/inside-etfs \"Inside ETFs\").\n\n### Disadvantages of ETFs\n**Trading costs**\n\nThere could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade.\n\n**Lack of customization**\n\nBecause ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities.\n\n**Possible tracking errors**\n\nCertain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called \"tracking error.\" Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark.\n\n### How to invest in ETFs\nHere are the steps for how to invest in ETFs.\n\n**1\\. Open and fund an account that can trade ETFs**\n\nMost [brokerage accounts](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-is-a-brokerage-account \"brokerage accounts\") allow you to trade ETFs, and some retirement accounts, like [IRAs](https:\/\/www.fidelity.com\/learning-center\/smart-money\/what-is-an-ira \"IRAs\"), do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs.\n\n**2\\. Research ETFs that align with your financial goals**\n\nBefore placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the [Fidelity ETF Screener](https:\/\/research2.fidelity.com\/fidelity\/screeners\/etf\/landing.asp \"Fidelity ETF Screener\")), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon.\n\n**3\\. Buy the ETF using the ticker**\n\nA \"ticker\" is the short letter code associated with a given ETF—a ticker would look like \"ABCD,\" for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute.\n\n**4\\. Decide when you want to sell**\n\nIt might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about [creating an exit strategy](https:\/\/www.fidelity.com\/learning-center\/smart-money\/investing-strategies \"creating an exit strategy\") for any investment.","meta_canonical":null}

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Boilerpipe Text	Exchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs. What is an ETF? An ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S&P 500 ® 1 or Nasdaq composite index. 2 Unlike mutual funds, ETFs trade on exchanges just like stocks , and their price changes throughout the day, providing liquidity and flexibility. How do ETFs work? ETFs have become popular with investors in large part because they can provide a way to buy a potentially diversified investment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk. You can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA. Types of ETFs The ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs: Index ETFs track a market index, such as the S&P 500 ® or Nasdaq composite. Actively managed ETFs are funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF. Fixed-income ETFs provide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds. Style ETFs focus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth. Sector and industry ETFs invest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water. Commodity ETFs track the price of a commodity, such as timber, oil, or gold. Foreign market ETFs give exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index. Inverse ETFs profit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives. Leveraged ETFs are considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing. ETFs vs. mutual funds Mutual funds and ETFs are similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them. ETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close. Although only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund. Holdings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay. ETFs vs. stocks The main difference between ETFs and stocks is that ETFs, depending on the fund, can potentially provide a diversified investment. Stocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market. ETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities. Advantages of ETFs Lower fees Both ETFs and mutual funds have an " expense ratio ," which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a $1,000 investment, you're paying $1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds. 3 Easily tradeable ETFs are listed on public exchanges, and you can buy and sell them throughout market hours just like stocks. You can also see their prices change throughout the trading day in real time. Tax efficiency When mutual funds change their holdings, any profits from selling investments are considered " capital gains " and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article Inside ETFs . Disadvantages of ETFs Trading costs There could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade. Lack of customization Because ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities. Possible tracking errors Certain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called "tracking error." Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark. How to invest in ETFs Here are the steps for how to invest in ETFs. 1. Open and fund an account that can trade ETFs Most brokerage accounts allow you to trade ETFs, and some retirement accounts, like IRAs , do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs. 2. Research ETFs that align with your financial goals Before placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the Fidelity ETF Screener ), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon. 3. Buy the ETF using the ticker A "ticker" is the short letter code associated with a given ETF—a ticker would look like "ABCD," for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute. 4. Decide when you want to sell It might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about creating an exit strategy for any investment.
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[Becoming self-employed](https://www.fidelity.com/learning-center/life-events/how-to-become-self-employed "Becoming self-employed") - Investing and trading - [Investing for beginners](https://www.fidelity.com/learning-center/trading-investing/investing-for-beginners "Investing for beginners") - [Trading for beginners](https://www.fidelity.com/learning-center/trading-investing/trading-for-beginners "Trading for beginners") - [Crypto basics](https://www.fidelity.com/learning-center/trading-investing/crypto/crypto-for-beginners "Crypto basics") - [Crypto: Beyond the basics](https://www.fidelity.com/learning-center/trading-investing/crypto/crypto-advanced "Crypto: Beyond the basics") - [Alternative investing](https://www.fidelity.com/learning-center/trading-investing/alternative-investing "Alternative investing") - [Exploring stocks and sectors](https://www.fidelity.com/learning-center/trading-investing/finding-stocks-and-sector-ideas "Exploring stocks and sectors") - [Investing for income](https://www.fidelity.com/learning-center/trading-investing/investing-for-income "Investing for income") - [Analyzing stock fundamentals](https://www.fidelity.com/learning-center/trading-investing/fundamental-analysis/analyzing-stock-fundamentals "Analyzing stock fundamentals") - [Using technical analysis](https://www.fidelity.com/learning-center/trading-investing/technical-analysis/using-technical-analysis "Using technical analysis") - Investment products - [ETFs](https://www.fidelity.com/learning-center/investment-products/etf/etfs "ETFs") - [Mutual funds](https://www.fidelity.com/learning-center/investment-products/mutual-funds/mutual-funds "Mutual funds ") - [Stocks](https://www.fidelity.com/learning-center/investment-products/stocks/stocks "Stocks") - [Fixed income, bonds, CDs](https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/fixed-income-bonds-cds "Fixed income, bonds, CDs") - [Annuities](https://www.fidelity.com/learning-center/investment-products/annuities "Annuities") - [Closed-end funds](https://www.fidelity.com/learning-center/investment-products/closed-end-funds/closed-end-funds "Closed-end funds") - 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Share ![Share](https://www.fidelity.com/bin-public/600_Fidelity_Com_English/images/article/share.svg) Close Popover * What is an ETF? \\| Fidelity Clicking a link will open a new window. - [Facebook](https://www.fidelity.com/learning-center/smart-money/what-are-etfs#facebook) - [Twitter](https://www.fidelity.com/learning-center/smart-money/what-are-etfs#twitter) - [LinkedIn](https://www.fidelity.com/learning-center/smart-money/what-are-etfs#linkedin) [Print ![Print](https://www.fidelity.com/bin-public/600_Fidelity_Com_English/images/article/Print.svg)](https://www.fidelity.com/learning-center/smart-money/what-are-etfs#print) # What is an ETF? Learn how ETFs work and how to invest in them. Fidelity Learn ![](https://www.fidelity.com/bin-public/600_Fidelity_Com_English/images/learning-center/heros/what-are-etfs_607874961_banner.png) ### Key takeaways - ETF stands for exchange-traded fund. - ETFs contain groups of investments, such as stocks and bonds, often organized around a strategy, theme, or exposure. - ETFs have become popular with investors in large part because many options, like index ETFs, provide a simple way to buy a diversified investment. Exchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs. ### What is an ETF? An ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S\&P 500®1 or Nasdaq composite index.2 Unlike [mutual funds,](https://www.fidelity.com/learning-center/investment-products/mutual-funds/what-are-mutual-funds "mutual funds,") ETFs trade on exchanges just like [stocks](https://www.fidelity.com/learning-center/smart-money/what-are-stocks "stocks"), and their price changes throughout the day, providing liquidity and flexibility. ### How do ETFs work? ETFs have become popular with investors in large part because they can provide a way to buy a potentially [diversified](https://www.fidelity.com/learning-center/investment-products/mutual-funds/diversification "diversified") investment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk. You can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA. Loading This could take a few moments. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video. Video Player is loading. Play Video Loaded: 0% Duration 0:00 Play Captions - captions settings, opens captions settings dialog - captions off, selected Subtitles - subtitles off, selected Chapters - Chapters Playback Rate 1x - 2x - 1\.75x - 1\.5x - 1\.25x - 1x - 0\.75x - 0\.5x - 0\.25x Mute Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color Transparency Background Color Transparency Window Color Transparency Font Size Text Edge Style Font Family Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. ## Read relevant legal disclosures ### Types of ETFs The ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs: - Index ETFs track a market index, such as the S\&P 500® or Nasdaq composite. - Actively managed ETFs are funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF. - Fixed-income ETFs provide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds. - Style ETFs focus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth. - Sector and industry ETFs invest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water. - Commodity ETFs track the price of a commodity, such as timber, oil, or gold. - Foreign market ETFs give exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index. - Inverse ETFs profit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives. - Leveraged ETFs are considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing. ### ETFs vs. mutual funds [Mutual funds and ETFs](https://www.fidelity.com/viewpoints/investing-ideas/mutual-fund-or-etf) are similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them. - ETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close. - Although only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund. - Holdings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay. ### ETFs vs. stocks The main [difference between ETFs and stocks](https://www.fidelity.com/learning-center/personal-finance/stocks-etfs-mutual-funds-which-is-right "difference between ETFs and stocks") is that ETFs, depending on the fund, can potentially provide a diversified investment. - Stocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market. - ETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities. ### Advantages of ETFs Lower fees Both ETFs and mutual funds have an "[expense ratio](https://www.fidelity.com/learning-center/investment-products/etf/expense-ratio-etf "expense ratio")," which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a \$1,000 investment, you're paying \$1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds.3 Easily tradeable ETFs are listed on public exchanges, and you can buy and sell them throughout [market hours](https://www.fidelity.com/learning-center/smart-money/stock-market-hours-and-holidays "market hours") just like stocks. You can also see their prices change throughout the trading day in real time. Tax efficiency When mutual funds change their holdings, any profits from selling investments are considered "[capital gains](https://www.fidelity.com/learning-center/smart-money/capital-gains-tax-rates "capital gains")" and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article [Inside ETFs](https://www.fidelity.com/viewpoints/active-investor/inside-etfs "Inside ETFs"). ### Disadvantages of ETFs Trading costs There could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade. Lack of customization Because ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities. Possible tracking errors Certain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called "tracking error." Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark. ### How to invest in ETFs Here are the steps for how to invest in ETFs. 1\. Open and fund an account that can trade ETFs Most [brokerage accounts](https://www.fidelity.com/learning-center/smart-money/what-is-a-brokerage-account "brokerage accounts") allow you to trade ETFs, and some retirement accounts, like [IRAs](https://www.fidelity.com/learning-center/smart-money/what-is-an-ira "IRAs"), do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs. 2\. Research ETFs that align with your financial goals Before placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the [Fidelity ETF Screener](https://research2.fidelity.com/fidelity/screeners/etf/landing.asp "Fidelity ETF Screener")), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon. 3\. Buy the ETF using the ticker A "ticker" is the short letter code associated with a given ETF—a ticker would look like "ABCD," for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute. 4\. Decide when you want to sell It might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about [creating an exit strategy](https://www.fidelity.com/learning-center/smart-money/investing-strategies "creating an exit strategy") for any investment. ## Find the right ETF for you Use our screener to identify ETFs and ETPs that match your investment goals. [Screen ETFs now](https://digital.fidelity.com/prgw/digital/research/etf) ## More to explore ### [ETFs at Fidelity](https://www.fidelity.com/etfs/investing-in-etfs) Learn about Fidelity tools and resources for ETFs. ### [Types of ETFs/ETPs](https://www.fidelity.com/learning-center/investment-products/etf/etfs) See which ETFs/ETPs might be a good fit. ## Subscribe to Fidelity Smart Money℠ What the news means for your money, plus tips to help you spend, save, and invest. ### Looking for more ideas and insights? We'll deliver them right to your inbox. Manage subscriptions ### Thanks for subscribing\! Check out your Favorites page, where you can: - Tell us the topics you want to learn more about - View content you've saved for later - Subscribe to our newsletters [Go to Favorites](https://www.fidelity.com/learning-center/favorites) ### We're on our way, but not quite there yet Good news, you're on the early-access list. But we're not available in your state just yet. 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Loading - [Investing for beginners](https://www.fidelity.com/learning-center/trading-investing/investing-for-beginners) - [Finding stock and sector ideas](https://www.fidelity.com/learning-center/trading-investing/finding-stocks-and-sector-ideas) - [Investing for income](https://www.fidelity.com/learning-center/trading-investing/investing-for-income) - [Fixed income, bonds, CDs](https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/fixed-income-bonds-cds) - [Using margin](https://www.fidelity.com/learning-center/trading-investing/using-margin) - [Trading for beginners](https://www.fidelity.com/learning-center/trading-investing/trading-for-beginners) - [Advanced trading strategies](https://www.fidelity.com/learning-center/trading-investing/more-trading-strategies) - [ETFs](https://www.fidelity.com/learning-center/investment-products/etf/etfs) - [Using technical analysis](https://www.fidelity.com/learning-center/trading-investing/technical-analysis/using-technical-analysis) - [Mutual funds](https://www.fidelity.com/learning-center/investment-products/mutual-funds/mutual-funds) - [Stocks](https://www.fidelity.com/learning-center/investment-products/stocks/stocks) 1\. The S\&P 500® Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance. 2\. Nasdaq Composite Index is a market capitalization–weighted index that is designed to represent the performance of NASDAQ stocks. 3\. Expense ratio is the total annual fund operating expense ratio from the fund's most recent prospectus. Exchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETPs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETP may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETP to another and losses may be magnified if no liquid market exists for the ETP's shares when attempting to sell them. Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. In general, fixed Income ETPs carry risks similar to those of bonds, including interest rate risk (as interest rates rise bond prices usually fall, and vice versa), issuer or counterparty default risk, issuer credit risk, inflation risk and call risk. Unlike individual bonds, many fixed income ETPs do not have a maturity date, so a strategy of holding a fixed income security until maturity to try to avoid losses associated with bond price volatility is not possible with those types of ETPs. Certain fixed income ETPs may invest in lower quality debt securities that involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies. Commodity ETPs are generally more volatile than broad-based ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply and demand relationships, interest rates, monetary and other governmental policies or factors affecting a particular sector or commodity. ETPs that track a single sector or commodity may exhibit even greater volatility. Commodity ETPs which use futures, options or other derivative instruments may involve still greater risk, and performance can deviate significantly from the spot price performance of the referenced commodity, particularly over longer holding periods. The risk of loss in trading foreign currency can be substantial and may be magnified if trading on margin. Customers should therefore carefully consider whether such trading is suitable for them in light of their financial condition, risk tolerance and understanding of foreign markets. These risks include foreign currency risk and liquidation risk. 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zw4SR1mWv8zQEYrcClV137yHSITjs3bAQfYYQRRhhhhBFGGAH8D9DXSGd7oPh2AAAAAElFTkSuQmCC) 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![](data:image/png;base64,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Readable Markdown	Exchange-traded funds (ETFs) trade like stocks and can help you easily create a diversified portfolio to align with your investing goals. Learn more about ETFs, how they work, and how you can invest in ETFs. ### What is an ETF? An ETF is a tradeable fund, containing many investments, generally organized around a strategy, theme, or exposure. That approach could be tracking a sector of the stock market, like technology or energy; investing in a specific type of bond, like high-yield or municipal; or tracking a market index, like the S\&P 500®1 or Nasdaq composite index.2 Unlike [mutual funds,](https://www.fidelity.com/learning-center/investment-products/mutual-funds/what-are-mutual-funds "mutual funds,") ETFs trade on exchanges just like [stocks](https://www.fidelity.com/learning-center/smart-money/what-are-stocks "stocks"), and their price changes throughout the day, providing liquidity and flexibility. ### How do ETFs work? ETFs have become popular with investors in large part because they can provide a way to buy a potentially [diversified](https://www.fidelity.com/learning-center/investment-products/mutual-funds/diversification "diversified") investment. In a single trade, an ETF can give you exposure to hundreds or even thousands of different bonds, stocks, or other types of investments. That means the performance of your ETF is determined by the price change of all those assets. If you were to buy a stock, your investment's performance would be tied to that single company, which could increase your risk. You can invest in ETFs through a broker, such as a broker dealer or financial institution. At most places, you can trade ETFs in brokerage accounts and in retirement accounts, like Roth IRAs and traditional IRAs. Some providers allow you to invest in ETFs in your HSA. ### Types of ETFs The ETF market is constantly expanding, with thousands now listed on US exchanges, following dozens of different investing objectives. Here are some different types of ETFs: - Index ETFs track a market index, such as the S\&P 500® or Nasdaq composite. - Actively managed ETFs are funds managed by a team of professionals to potentially outperform passively managed funds, like an index ETF. - Fixed-income ETFs provide exposure to different types of bonds like US Treasury, corporate, municipal, international, and high-yield bonds. - Style ETFs focus on a specific investing style (like growth or value) or market capitalization (like large or small), or a combination of investing style and market capitalization, such as large-cap value or small-cap growth. - Sector and industry ETFs invest in stocks in a specific sector of the stock market, like energy, health care, or utilities, or in a specific industry within those sectors, like oil, pharmaceuticals, or water. - Commodity ETFs track the price of a commodity, such as timber, oil, or gold. - Foreign market ETFs give exposure to non-US markets and international companies, such as Japan's Nikkei index or Hong Kong's Hang Seng index. - Inverse ETFs profit from a decline in the underlying market or index. Keep in mind, these types of ETFs are risky and more complex and are generally used by experienced investors for short-term trading objectives. - Leveraged ETFs are considered higher-risk investments and track the price movement of a market, segment of the market, or index by magnitudes, like 2 or 3 times the price change, whether up or down. Like inverse ETFs, these types of ETFs are also risky and complex, and you should carefully evaluate your goals and objectives prior to investing. ### ETFs vs. mutual funds [Mutual funds and ETFs](https://www.fidelity.com/viewpoints/investing-ideas/mutual-fund-or-etf) are similar and often have mirrored investing objectives. But knowing their key differences can help investors decide which might be best for them. - ETFs can be bought and sold throughout the day, and you can track prices changes anytime the market is open. You can typically only buy and sell and see prices for mutual funds once a day after the markets close. - Although only some ETFs are actively managed, pricing is generally lower than mutual fund pricing because of the structure of the security. For example, in most cases, active ETFs are less expensive than a comparable mutual fund. - Holdings transparency is another difference. ETFs share their ingredients somewhat frequently, whereas mutual funds make their big reveal on a quarterly basis, with a 30-day delay. ### ETFs vs. stocks The main [difference between ETFs and stocks](https://www.fidelity.com/learning-center/personal-finance/stocks-etfs-mutual-funds-which-is-right "difference between ETFs and stocks") is that ETFs, depending on the fund, can potentially provide a diversified investment. - Stocks represent a piece of ownership, or a share, in a public company. Investing in a single stock means the performance of that investment is determined entirely by the performance of that company. An ETF that invests in stocks, on the other hand, invests in many different companies across a sector or market. Diversifying your investments doesn't guarantee you won't lose money, but it can help protect your portfolio from the ups and downs of the market. - ETFs also may invest in other types of investments than equity in companies. ETFs could invest in bonds, currencies, or commodities. ### Advantages of ETFs Lower fees Both ETFs and mutual funds have an "[expense ratio](https://www.fidelity.com/learning-center/investment-products/etf/expense-ratio-etf "expense ratio")," which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a \$1,000 investment, you're paying \$1.80 in fees a year. Because of an ETF's structure, their administrative costs tend to be less than those of like mutual funds.3 Easily tradeable ETFs are listed on public exchanges, and you can buy and sell them throughout [market hours](https://www.fidelity.com/learning-center/smart-money/stock-market-hours-and-holidays "market hours") just like stocks. You can also see their prices change throughout the trading day in real time. Tax efficiency When mutual funds change their holdings, any profits from selling investments are considered "[capital gains](https://www.fidelity.com/learning-center/smart-money/capital-gains-tax-rates "capital gains")" and are taxed. Who's responsible for those taxes? The shareholders, aka the people who own shares in the mutual fund. ETFs are structured in a unique way that helps shareholders reduce the annual taxes on their holdings. You typically only realize a gain (or a loss) when you sell shares of an ETF. To learn the nuts and bolts of how that's done, check out the article [Inside ETFs](https://www.fidelity.com/viewpoints/active-investor/inside-etfs "Inside ETFs"). ### Disadvantages of ETFs Trading costs There could be commissions or fees associated with buying or selling ETFs from certain financial institutions. There's another cost to consider too: the bid-ask spread. Like mutual funds, some ETFs are traded thousands of times throughout the day, but other more specialized ETFs have low trading volume. Because there aren't many buyers and sellers, there can be a price gap between what someone is willing to pay to buy (the bid) and what someone is willing to receive to sell (the ask). The lower the trading volume, often the larger the spread between the bid and ask. A large spread could mean you'd have to take a discount on your sale or pay a premium on your buy. Your other option: waiting for the spread to narrow before you trade. Lack of customization Because ETFs are premade funds, you don't get a say in what they invest in. In other words, ETFs can't be personalized. So if you choose to invest in a given fund, make sure you're comfortable and committed to gaining exposure to all those securities. Possible tracking errors Certain index of passive ETFs aim to track market indexes and indicators, giving investors a way to mimic the performance of that benchmark. However, an ETF's performance can miss the exact price changes of that index or indicator, leading to what's called "tracking error." Before investing in any ETF tracking an index or indicator, make sure to investigate its track(ing) record to see how closely it's mirrors the benchmark. ### How to invest in ETFs Here are the steps for how to invest in ETFs. 1\. Open and fund an account that can trade ETFs Most [brokerage accounts](https://www.fidelity.com/learning-center/smart-money/what-is-a-brokerage-account "brokerage accounts") allow you to trade ETFs, and some retirement accounts, like [IRAs](https://www.fidelity.com/learning-center/smart-money/what-is-an-ira "IRAs"), do too. Before opening an account, look into the trading capabilities of the brokerage or financial institution, and see if the financial institution charges any trading commissions or fees. Once you have an account, you'll have to deposit money in it to start investing in ETFs. 2\. Research ETFs that align with your financial goals Before placing any trades, do your homework. It's a smart idea to thoroughly read a fund's objective and strategy, investigate what a fund invests in, and research the fund's expense ratio. Many brokerages have internal tools to help you research ETFs (like the [Fidelity ETF Screener](https://research2.fidelity.com/fidelity/screeners/etf/landing.asp "Fidelity ETF Screener")), and there are also third-party research firms, like Morningstar, that could give you helpful insight. Keep in mind how this investment may fit into your investing plan and asset allocation strategy, and make sure it aligns with your investment goals, risk tolerance, and time horizon. 3\. Buy the ETF using the ticker A "ticker" is the short letter code associated with a given ETF—a ticker would look like "ABCD," for example. These tickers are how trade orders are communicated to exchanges. To buy an ETF, keep its ticker handy and input it into your brokerage's trading function when you're ready to execute. 4\. Decide when you want to sell It might seem strange to pick a time to sell an ETF you only just bought, but having a clear plan from the start could help you maximize your potential profit or at least minimize your potential loss. For instance, you might want to pick an upper and lower price your ETF could hit as your get-out signals. Here's more about [creating an exit strategy](https://www.fidelity.com/learning-center/smart-money/investing-strategies "creating an exit strategy") for any investment.
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