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1. Shard Calculation

Query:

Response:

Calculated Shard: 121 (from laksa018)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa121.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.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them","crawl_time":1776142105,"first_indexed_time":1606472215,"http_code":200,"src_unparsed":"com,ig!www,\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them s443","src_root_hash":"18243280799424100921","history_drop_reason":null,"meta_title":"What Are ETFs and How Do You Trade Them? | IG International","meta_descriptions":["Discover what ETFs are, the different types of ETF available to buy or trade, and how you can open a position."],"attrs_boilerpipe_text":"What is an exchange traded fund (ETF)?\nAn exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market.\nETFs are bought and sold on a stock exchange – in much the same way as\nstocks\n. They perform a similar function to\nindices\n, investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets.\nMany ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via\nCFDs\n.\nPopular ETFs to watch\nThe\niShares Core S&P 500 ETF\ntracks the S&P 500 index, which measures the performance of large-cap US stocks\nThe\nVanguard Total International Stock ETF\n(VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index\nThe\niShares Core MSCI Total International Stock ETF\ntracks the results of large-, mid- and small-cap non-US equities\nThe\nVanguard FTSE 100 UCTIS ETF\ntracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation\nThe Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry\nThe WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex\nThe\niShares US Energy ETF\ntracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector\nHow to pick the right ETF for you\nWith so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF:\nThe type of ETF\nThere are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short.\nTake a look at the\ndifferent types of ETF\nbelow.\nThe ETF’s size\nAssets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less.\nThe structure of ETFs\nThere are two main types of ETF available.\nPhysical ETFs\n, which use assets to track the underlying market, and\nsynthetic ETFs\nwhich use derivatives. Both have advantages and limitations which you should consider before taking a position.\nFor example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable.\nTypes of ETF\nStock index ETFs\nStock index ETFs are funds that track the performance of a given index. As\nstock indices\nare nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price.\nETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would\ntrack the performance of the FTSE 100\n, and would either hold physical shares of the index’s constituents, or products that mimic its price movements.\nCurrency ETFs\nCurrency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies.\nYou can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk.\nSector and industry ETFs\nA sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more.\nLike currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF.\nCommodity ETFs\nCommodity ETFs usually take their price from futures contracts, rather than containing the physical commodity.\nIt’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry.\nGeographic ETFs\nGeographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio.\nInverse or short ETFs\nInverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF.\nYou’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets.\nLeveraged ETFs\nLeveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a $2 exposure to the underlying asset for every $1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full $ exposure, so losses or profits could far outweigh your initial capital.\nHow to take a position on ETFs\nTrading an ETF with derivatives\nTrading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with\nCFDs\n, you can use leverage to get amplified exposure to the ETF of your choice.\nAs a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a\nrisk management\nstrategy before you trade.\nFAQs\nHow does an ETF work?\nETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors.\nThese investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns.\nWhat is the difference between ETFs and shares?\nA share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an\ninitial public offering (IPO)\n. When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights.\nETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets.\nDiscover\nIPO trading\nand the\nupcoming IPOs\nto watch.\nHow is an ETF price determined?\nAn ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing.\nThe percentage change in the ETFs price is what matters, not the actual price.\nHow do ETFs make money?\nThere are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks.\nETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately.\nDevelop your knowledge of financial markets\nFind out more about a range of markets and test yourself with IG Academy’s online courses.\nTry these next\nTrade 700 US shares 24\/5\n1\n, and #us#extendedhours##+ US shares in extended hours.\nDiscover upcoming IPOs and how to trade grey markets with us.\nLearn how to trade shares with our step-by-step guide.\n1\nTrading hours run from Monday 8am to Saturday 5am (UTC +8). During daylight savings, hours shift to 6am Monday to 3am Saturday (UTC +8).","attrs_markdown":"[Skip to content](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them#main-content)\n\nCFDs are complex instruments. 71% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.   CFDs are complex instruments. 71% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.\n\nMore from IG\n\n- [Personal](https:\/\/www.ig.com\/en)\n- - [Academy](https:\/\/www.ig.com\/en\/learn-to-trade\/ig-academy)\n  - [Help](https:\/\/www.ig.com\/en\/help-and-support)\n\n- [Inbox](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n- [Academy](https:\/\/www.ig.com\/en\/learn-to-trade\/ig-academy)\n- [Help](https:\/\/www.ig.com\/en\/help-and-support)\n\nEnglish\n\n- [繁體中文](https:\/\/www.ig.com\/cn\/trading-etfs\/what-are-etfs-how-do-you-trade-them)\n- [Español](https:\/\/www.ig.com\/latam\/acciones\/trading-de-etf\/que-son-los-etf-y-como-operar)\n- [English](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n- [简体中文](https:\/\/www.ig.com\/zh)\n\n- [Log in](https:\/\/www.ig.com\/en\/login)\n- [Create live account](https:\/\/www.ig.com\/en\/application-form)\n\nMy account\n\n- [My IG](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n- - 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[IG Academy](https:\/\/www.ig.com\/en\/learn-to-trade\/ig-academy)\n  - [Strategy and planning](https:\/\/www.ig.com\/en\/trading-strategies)\n  - [Managing your risk](https:\/\/www.ig.com\/en\/risk-management)\n    - [Risk vs reward in trading](https:\/\/www.ig.com\/en\/risk-management\/risk-reward)\n    - [What is leverage?](https:\/\/www.ig.com\/en\/risk-management\/what-is-leverage)\n    - [The impact of leverage on your trading](https:\/\/www.ig.com\/en\/risk-management\/impact-of-leverage-on-your-trading)\n    - [What are stop orders?](https:\/\/www.ig.com\/en\/risk-management\/stop-orders)\n    - [What are limit orders?](https:\/\/www.ig.com\/en\/risk-management\/limit-orders)\n  - [Trading need-to-knows](https:\/\/www.ig.com\/en\/trading-need-to-knows)\n    - [What is trading?](https:\/\/www.ig.com\/en\/trading-need-to-knows\/what-is-trading)\n    - [Trading for beginners: a guide](https:\/\/www.ig.com\/en\/trading-need-to-knows\/trading-for-beginners)\n    - [Start trading: how to get into trading](https:\/\/www.ig.com\/en\/trading-need-to-knows\/how-to-get-into-trading)\n    - [How to choose the best online broker](https:\/\/www.ig.com\/en\/trading-need-to-knows\/how-to-choose-best-online-broker)\n    - [How to start trading online](https:\/\/www.ig.com\/en\/trading-need-to-knows\/how-to-trade-online)\n    - [What are derivatives?](https:\/\/www.ig.com\/en\/trading-need-to-knows\/what-are-derivatives)\n    - [What is a brokerage account?](https:\/\/www.ig.com\/en\/trading-need-to-knows\/what-is-brokerage-account-how-to-open)\n    - [How to choose the best forex broker](https:\/\/www.ig.com\/en\/trading-need-to-knows\/how-to-choose-uk-forex-broker)\n    - [What is margin trading?](https:\/\/www.ig.com\/en\/trading-need-to-knows\/what-is-margin-trading)\n    - [How to find the best day trading platform](https:\/\/www.ig.com\/en\/trading-need-to-knows\/how-to-find-trading-platform-day-traders)\n    - [How to trade stocks online](https:\/\/www.ig.com\/en\/trading-need-to-knows\/online-stock-trading)\n  \n  Ways to learn\n  \n  - [Seminars and webinars](https:\/\/www.ig.com\/en\/seminars-and-webinars)\n  - [Glossary of trading terms](https:\/\/www.ig.com\/en\/glossary-trading-terms)\n  - [Maximising trading success](https:\/\/www.ig.com\/en\/maximising-trading-success)\n  - [Master your trading mind](https:\/\/www.ig.com\/en\/master-your-trading-mind)\n  - [Trading psychology podcast series](https:\/\/www.ig.com\/en\/trading-podcasts\/trading-psychology-podcast-series)\n  \n  Discover more\n  \n  - [Explore on demo](https:\/\/www.ig.com\/en\/demo-account)\n  - [Help and support](https:\/\/www.ig.com\/en\/help-and-support)\n  \n  ![Academy](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/fr_FR\/images\/brochure-pages\/2025\/01\/22\/academy-c.png\/jcr:content\/renditions\/original-size.webp)\n  \n  Master the markets with IG Academy\n\n- [Personal](https:\/\/www.ig.com\/en)\n\n- [Academy](https:\/\/www.ig.com\/en\/learn-to-trade\/ig-academy)\n- [Help](https:\/\/www.ig.com\/en\/help-and-support)\n\n[Create live account](https:\/\/www.ig.com\/en\/application-form)\n\nEnglish\n\n- [繁體中文](https:\/\/www.ig.com\/cn\/trading-etfs\/what-are-etfs-how-do-you-trade-them)\n- [Español](https:\/\/www.ig.com\/latam\/acciones\/trading-de-etf\/que-son-los-etf-y-como-operar)\n- [English](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n- [简体中文](https:\/\/www.ig.com\/zh)\n\n[Create live account](https:\/\/www.ig.com\/en\/application-form)\n\nSearch\n\nNo results found\n\n[View more search results](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n\n[1]() [2]() [3]() [4]() [5]() [6]() [7]() [8]() [9]() [10]()\n\nRelated search:  [Market Data](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n\n| Market Data | Type of market |\n|---|---|\n\n[See all Market data search results \\>](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n\n- [Trading Shares](https:\/\/www.ig.com\/en\/markets-to-trade)\n\n# What are ETFs and how do you trade them?\nTrade ETFs to get diverse exposure to a range of markets – including indices, sectors, commodities and currencies. Find out what ETFs are and how to open your first position.\n\nGot questions? Chat with us anytime via [web chat](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them) or [WhatsApp](https:\/\/wa.me\/message\/Y3X4LB3MTP2BJ1) to get started.\n\n![](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/Hero\/ETF-trading-desktop.jpg\/jcr:content\/renditions\/original-size.webp)\n\n## What is an exchange traded fund (ETF)?\nAn exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market.\n\n##\nETFs are bought and sold on a stock exchange – in much the same way as [stocks](https:\/\/www.ig.com\/en\/shares\/what-are-shares). They perform a similar function to [indices](https:\/\/www.ig.com\/en\/indices\/what-are-indices-how-do-you-trade-them), investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets.\n\nMany ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via [CFDs](https:\/\/www.ig.com\/en\/cfd-trading\/what-is-cfd-trading-how-does-it-work).\n\n![ETF shares](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/ETF_Cluster\/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-01.png\/jcr:content\/renditions\/original-size.webp)\n\n### Popular ETFs to watch\n- The [iShares Core S\\&P 500 ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/sp-500-index-fundus---ivv--IVV-US) tracks the S\\&P 500 index, which measures the performance of large-cap US stocks\n- The [Vanguard Total International Stock ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/vanguard-total-international-stock-etf) (VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index\n- The [iShares Core MSCI Total International Stock ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/ishares-core-msci-world-all-cap-etf) tracks the results of large-, mid- and small-cap non-US equities\n- The [Vanguard FTSE 100 UCTIS ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/vanguard-ftse-100-uctis-etf) tracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation\n- The Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry\n- The WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex\n- The [iShares US Energy ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/dj-us-energy-sector-index-fund---iye-IYE-US) tracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector\n\n## How to pick the right ETF for you\nWith so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF:\n\n### The type of ETF\nThere are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short.\n\nTake a look at the [different types of ETF](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them#ETF-types) below.\n\n### The ETF’s size\nAssets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less.\n\n### The structure of ETFs\nThere are two main types of ETF available. **Physical ETFs**, which use assets to track the underlying market, and **synthetic ETFs** which use derivatives. Both have advantages and limitations which you should consider before taking a position.\n\nFor example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable.\n\n## Types of ETF\n![Types of ETF](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/ETF_Cluster\/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-02.png\/jcr:content\/renditions\/original-size.webp)\n\n### Stock index ETFs\nStock index ETFs are funds that track the performance of a given index. As [stock indices](https:\/\/www.ig.com\/en\/indices) are nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price.\n\nETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would [track the performance of the FTSE 100](https:\/\/www.ig.com\/en\/indices\/how-to-trade-invest-ftse-100), and would either hold physical shares of the index’s constituents, or products that mimic its price movements.\n\n### Currency ETFs\nCurrency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies.\n\nYou can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk.\n\n### Sector and industry ETFs\nA sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more.\n\nLike currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF.\n\n### Commodity ETFs\nCommodity ETFs usually take their price from futures contracts, rather than containing the physical commodity.\n\nIt’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry.\n\n### Geographic ETFs\nGeographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio.\n\n### Inverse or short ETFs\nInverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF.\n\nYou’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets.\n\n### Leveraged ETFs\nLeveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a \\$2 exposure to the underlying asset for every \\$1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full \\$ exposure, so losses or profits could far outweigh your initial capital.\n\n## How to take a position on ETFs\n### Trading an ETF with derivatives\nTrading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with [CFDs](https:\/\/www.ig.com\/en\/cfd-trading\/what-is-cfd-trading-how-does-it-work), you can use leverage to get amplified exposure to the ETF of your choice.\n\nAs a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a [risk management](https:\/\/www.ig.com\/en\/risk-management) strategy before you trade.\n\n## FAQs\nHow does an ETF work?\n\nETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors.\n\nThese investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns.\n\nWhat is the difference between ETFs and shares?\n\nA share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an [initial public offering (IPO)](https:\/\/www.ig.com\/en\/shares\/ipos\/how-to-trade-ipo). When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights.\n\nETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets.\n\nDiscover [IPO trading](https:\/\/www.ig.com\/en\/shares\/ipos\/how-to-trade-ipo) and the [upcoming IPOs](https:\/\/www.ig.com\/en\/shares\/ipos\/upcoming-ipos) to watch.\n\nHow is an ETF price determined?\n\nAn ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing.\n\n![How is an ETF price determined](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/Hero\/Rebrand_Batch_5\/UK_etf-equation.jpg\/jcr:content\/renditions\/original-size.webp)\n\nThe percentage change in the ETFs price is what matters, not the actual price.\n\nHow do ETFs make money?\n\nThere are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks.\n\nETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately.\n\n## Develop your knowledge of financial markets\nFind out more about a range of markets and test yourself with IG Academy’s online courses.\n\n![IG Academy](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/UK_PSO_academy-device-image.jpeg\/jcr:content\/renditions\/original-size.webp)\n\n## Try these next\nTrade 700 US shares 24\/51, and \\#us\\#extendedhours\\##+ US shares in extended hours.\n\nDiscover upcoming IPOs and how to trade grey markets with us.\n\nLearn how to trade shares with our step-by-step guide.\n\n1 Trading hours run from Monday 8am to Saturday 5am (UTC +8). During daylight savings, hours shift to 6am Monday to 3am Saturday (UTC +8).\n\n## [Markets](https:\/\/www.ig.com\/en\/markets-to-trade)\n[Share CFDs](https:\/\/www.ig.com\/en\/shares)\n\n[Forex](https:\/\/www.ig.com\/en\/forex)\n\n[Indices](https:\/\/www.ig.com\/en\/indices)\n\n[Commodities](https:\/\/www.ig.com\/en\/commodities)\n\n[Other markets](https:\/\/www.ig.com\/en\/other-markets)\n\n## [Trading platforms](https:\/\/www.ig.com\/en\/trading-platforms)\n[Web platform](https:\/\/www.ig.com\/en\/trading-platforms)\n\n[Trading apps](https:\/\/www.ig.com\/en\/trading-platforms\/trading-apps)\n\n[TradingView](https:\/\/www.ig.com\/en\/trading-platforms\/tradingview)\n\n[MetaTrader 4](https:\/\/www.ig.com\/en\/trading-platforms\/metatrader-4)\n\n[MetaTrader 5](https:\/\/www.ig.com\/en\/trading-platforms\/metatrader-5)\n\n[ProRealTime](https:\/\/www.ig.com\/en\/trading-platforms\/prorealtime)\n\n[Compare features](https:\/\/www.ig.com\/en\/trading-platforms\/compare-trading-platforms)\n\n[Demo](https:\/\/www.ig.com\/en\/demo-account)\n\n## [Learn to trade](https:\/\/www.ig.com\/en\/trading-skills)\n[News and trade ideas](https:\/\/www.ig.com\/en\/news-and-trade-ideas)\n\n[Trading strategy](https:\/\/www.ig.com\/en\/trading-strategies)\n\n## [About](https:\/\/www.ig.com\/en\/about-us)\n[Charges and margins](https:\/\/www.ig.com\/en\/charges)\n\n[Premium services](https:\/\/www.ig.com\/en\/premium-services)\n\n[Refer a friend](https:\/\/www.ig.com\/en\/refer-a-friend)\n\n[Marketing partnerships](https:\/\/www.ig.com\/en\/marketing-partnership)\n\n[Corporate accounts](https:\/\/www.ig.com\/en\/corporate-accounts)\n\n## [Contact us](https:\/\/www.ig.com\/en\/contact-us)\n**Web chat:** [Click here](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them)\n\n**WhatsApp:** [Click here](https:\/\/wa.me\/message\/Y3X4LB3MTP2BJ1) to chat to us on our official Whatsapp channel ![](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/1696817315362\/sgx\/images\/rangeofmarkets\/SGX_WhatsAppIcon.png)\n\n- [IG](https:\/\/www.ig.com\/en\/about-us)\n- [Terms and agreements.](https:\/\/www.ig.com\/en\/terms-and-agreements)\n- [Privacy](https:\/\/www.ig.com\/en\/privacy)\n- [How to fund](https:\/\/www.ig.com\/en\/fund-your-account)\n- [Vulnerability](https:\/\/www.ig.com\/en\/client-vulnerability)\n- [Cookies](https:\/\/www.ig.com\/en\/cookies)\n- [About IG](https:\/\/www.ig.com\/en\/about-us)\n\n### Follow us online\n[![Facebook](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/common\/icons\/social-icons\/2024\/12\/17\/footer-meta-logo.svg)](https:\/\/www.facebook.com\/IGInternational2 \"Facebook\")   [![X](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/common\/icons\/social-icons\/2025\/01\/20\/footer-x-logo.svg)](https:\/\/twitter.com\/IGInternational \"X\")   [![Youtube](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/common\/icons\/social-icons\/2024\/12\/17\/footer-youtube-logo.svg)](https:\/\/www.youtube.com\/channel\/UCZj-ae-S_X-mocAH3xQnpUw \"Youtube\")   [![Linkedin](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/common\/icons\/social-icons\/2024\/12\/17\/footer-linkedin-logo.svg)](https:\/\/www.linkedin.com\/showcase\/35901904\/admin\/ \"Linkedin\")\n\nIG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc. IG Group established in London in 1974, and is a constituent of the FTSE 250 index.\n\nThe risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 71% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.\n\nCFD Accounts provided by IG International Limited. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.\n\nIG provides an execution-only service. The information in this site does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of or solicitation for transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.\n\nThe information on this site is not directed at residents of the United States and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.\n\nIG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc. IG International Limited receives services from other members of the IG Group including IG Markets Limited.\n\n- [Careers](https:\/\/www.iggroup.com\/corporate\/careers.html)\n- [IG Group](https:\/\/www.iggroup.com\/)\n\n© 2003-2026\n\n[![](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/1710231600236\/it_IT\/images\/articles\/2024\/03\/12\/WhatsApp.svg.png)](https:\/\/www.ig.com\/en\/contact-us)   [![](https:\/\/a.c-dn.net\/c\/content\/dam\/igcom-websites\/1710231600236\/it_IT\/images\/articles\/2024\/03\/12\/WhatsApp.svg.png)](https:\/\/wa.me\/message\/Y3X4LB3MTP2BJ1)\n\n![](https:\/\/i.smartnews-ads.com\/p?id=c6333b7e1d104df6822598f3&e=PageView)","attrs_readable_markdown":"## What is an exchange traded fund (ETF)?\nAn exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market.\n\nETFs are bought and sold on a stock exchange – in much the same way as [stocks](https:\/\/www.ig.com\/en\/shares\/what-are-shares). They perform a similar function to [indices](https:\/\/www.ig.com\/en\/indices\/what-are-indices-how-do-you-trade-them), investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets.\n\nMany ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via [CFDs](https:\/\/www.ig.com\/en\/cfd-trading\/what-is-cfd-trading-how-does-it-work).\n\n![ETF shares](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/ETF_Cluster\/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-01.png\/jcr:content\/renditions\/original-size.webp)\n\n### Popular ETFs to watch\n- The [iShares Core S\\&P 500 ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/sp-500-index-fundus---ivv--IVV-US) tracks the S\\&P 500 index, which measures the performance of large-cap US stocks\n- The [Vanguard Total International Stock ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/vanguard-total-international-stock-etf) (VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index\n- The [iShares Core MSCI Total International Stock ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/ishares-core-msci-world-all-cap-etf) tracks the results of large-, mid- and small-cap non-US equities\n- The [Vanguard FTSE 100 UCTIS ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/vanguard-ftse-100-uctis-etf) tracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation\n- The Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry\n- The WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex\n- The [iShares US Energy ETF](https:\/\/www.ig.com\/en\/shares\/markets-shares\/dj-us-energy-sector-index-fund---iye-IYE-US) tracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector\n\n## How to pick the right ETF for you\nWith so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF:\n\n### The type of ETF\nThere are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short.\n\nTake a look at the [different types of ETF](https:\/\/www.ig.com\/en\/shares\/etfs\/what-are-etfs-how-do-you-trade-them#ETF-types) below.\n\n### The ETF’s size\nAssets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less.\n\n### The structure of ETFs\nThere are two main types of ETF available. **Physical ETFs**, which use assets to track the underlying market, and **synthetic ETFs** which use derivatives. Both have advantages and limitations which you should consider before taking a position.\n\nFor example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable.\n\nTypes of ETF\n\n![Types of ETF](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/ETF_Cluster\/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-02.png\/jcr:content\/renditions\/original-size.webp)\n\n### Stock index ETFs\nStock index ETFs are funds that track the performance of a given index. As [stock indices](https:\/\/www.ig.com\/en\/indices) are nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price.\n\nETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would [track the performance of the FTSE 100](https:\/\/www.ig.com\/en\/indices\/how-to-trade-invest-ftse-100), and would either hold physical shares of the index’s constituents, or products that mimic its price movements.\n\n### Currency ETFs\nCurrency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies.\n\nYou can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk.\n\n### Sector and industry ETFs\nA sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more.\n\nLike currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF.\n\n### Commodity ETFs\nCommodity ETFs usually take their price from futures contracts, rather than containing the physical commodity.\n\nIt’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry.\n\n### Geographic ETFs\nGeographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio.\n\n### Inverse or short ETFs\nInverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF.\n\nYou’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets.\n\n### Leveraged ETFs\nLeveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a \\$2 exposure to the underlying asset for every \\$1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full \\$ exposure, so losses or profits could far outweigh your initial capital.\n\nHow to take a position on ETFs\n\n### Trading an ETF with derivatives\nTrading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with [CFDs](https:\/\/www.ig.com\/en\/cfd-trading\/what-is-cfd-trading-how-does-it-work), you can use leverage to get amplified exposure to the ETF of your choice.\n\nAs a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a [risk management](https:\/\/www.ig.com\/en\/risk-management) strategy before you trade.\n\nFAQs\n\nHow does an ETF work?\n\nETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors.\n\nThese investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns.\n\nWhat is the difference between ETFs and shares?\n\nA share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an [initial public offering (IPO)](https:\/\/www.ig.com\/en\/shares\/ipos\/how-to-trade-ipo). When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights.\n\nETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets.\n\nDiscover [IPO trading](https:\/\/www.ig.com\/en\/shares\/ipos\/how-to-trade-ipo) and the [upcoming IPOs](https:\/\/www.ig.com\/en\/shares\/ipos\/upcoming-ipos) to watch.\n\nHow is an ETF price determined?\n\nAn ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing.\n\n![How is an ETF price determined](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/Rebrand\/Hero\/Rebrand_Batch_5\/UK_etf-equation.jpg\/jcr:content\/renditions\/original-size.webp)\n\nThe percentage change in the ETFs price is what matters, not the actual price.\n\nHow do ETFs make money?\n\nThere are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks.\n\nETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately.\n\n## Develop your knowledge of financial markets\nFind out more about a range of markets and test yourself with IG Academy’s online courses.\n\n![IG Academy](https:\/\/a.c-dn.net\/c\/content\/dam\/publicsites\/igcom\/uk\/images\/UK_PSO_academy-device-image.jpeg\/jcr:content\/renditions\/original-size.webp)\n\nTry these next\n\nTrade 700 US shares 24\/51, and \\#us\\#extendedhours\\##+ US shares in extended hours.\n\nDiscover upcoming IPOs and how to trade grey markets with us.\n\nLearn how to trade shares with our step-by-step guide.\n\n1 Trading hours run from Monday 8am to Saturday 5am (UTC +8). During daylight savings, hours shift to 6am Monday to 3am Saturday (UTC +8).","meta_canonical":null}

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Boilerpipe Text	What is an exchange traded fund (ETF)? An exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market. ETFs are bought and sold on a stock exchange – in much the same way as stocks . They perform a similar function to indices , investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets. Many ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via CFDs . Popular ETFs to watch The iShares Core S&P 500 ETF tracks the S&P 500 index, which measures the performance of large-cap US stocks The Vanguard Total International Stock ETF (VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index The iShares Core MSCI Total International Stock ETF tracks the results of large-, mid- and small-cap non-US equities The Vanguard FTSE 100 UCTIS ETF tracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation The Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry The WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex The iShares US Energy ETF tracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector How to pick the right ETF for you With so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF: The type of ETF There are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short. Take a look at the different types of ETF below. The ETF’s size Assets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less. The structure of ETFs There are two main types of ETF available. Physical ETFs , which use assets to track the underlying market, and synthetic ETFs which use derivatives. Both have advantages and limitations which you should consider before taking a position. For example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable. Types of ETF Stock index ETFs Stock index ETFs are funds that track the performance of a given index. As stock indices are nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price. ETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would track the performance of the FTSE 100 , and would either hold physical shares of the index’s constituents, or products that mimic its price movements. Currency ETFs Currency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies. You can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk. Sector and industry ETFs A sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more. Like currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF. Commodity ETFs Commodity ETFs usually take their price from futures contracts, rather than containing the physical commodity. It’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry. Geographic ETFs Geographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio. Inverse or short ETFs Inverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF. You’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets. Leveraged ETFs Leveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a $2 exposure to the underlying asset for every $1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full $ exposure, so losses or profits could far outweigh your initial capital. How to take a position on ETFs Trading an ETF with derivatives Trading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with CFDs , you can use leverage to get amplified exposure to the ETF of your choice. As a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a risk management strategy before you trade. FAQs How does an ETF work? ETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors. These investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns. What is the difference between ETFs and shares? A share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an initial public offering (IPO) . When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights. ETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets. Discover IPO trading and the upcoming IPOs to watch. How is an ETF price determined? An ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing. The percentage change in the ETFs price is what matters, not the actual price. How do ETFs make money? There are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks. ETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately. Develop your knowledge of financial markets Find out more about a range of markets and test yourself with IG Academy’s online courses. Try these next Trade 700 US shares 24/5 1 , and #us#extendedhours##+ US shares in extended hours. Discover upcoming IPOs and how to trade grey markets with us. Learn how to trade shares with our step-by-step guide. 1 Trading hours run from Monday 8am to Saturday 5am (UTC +8). During daylight savings, hours shift to 6am Monday to 3am Saturday (UTC +8).
Markdown	[Skip to content](https://www.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them#main-content) CFDs are complex instruments. 71% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. 71% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. 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[Trading Shares](https://www.ig.com/en/markets-to-trade) # What are ETFs and how do you trade them? Trade ETFs to get diverse exposure to a range of markets – including indices, sectors, commodities and currencies. Find out what ETFs are and how to open your first position. Got questions? Chat with us anytime via [web chat](https://www.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them) or [WhatsApp](https://wa.me/message/Y3X4LB3MTP2BJ1) to get started. ![](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/Hero/ETF-trading-desktop.jpg/jcr:content/renditions/original-size.webp) ## What is an exchange traded fund (ETF)? An exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market. ## ETFs are bought and sold on a stock exchange – in much the same way as [stocks](https://www.ig.com/en/shares/what-are-shares). They perform a similar function to [indices](https://www.ig.com/en/indices/what-are-indices-how-do-you-trade-them), investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets. Many ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via [CFDs](https://www.ig.com/en/cfd-trading/what-is-cfd-trading-how-does-it-work). ![ETF shares](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/ETF_Cluster/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-01.png/jcr:content/renditions/original-size.webp) ### Popular ETFs to watch - The [iShares Core S\&P 500 ETF](https://www.ig.com/en/shares/markets-shares/sp-500-index-fundus---ivv--IVV-US) tracks the S\&P 500 index, which measures the performance of large-cap US stocks - The [Vanguard Total International Stock ETF](https://www.ig.com/en/shares/markets-shares/vanguard-total-international-stock-etf) (VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index - The [iShares Core MSCI Total International Stock ETF](https://www.ig.com/en/shares/markets-shares/ishares-core-msci-world-all-cap-etf) tracks the results of large-, mid- and small-cap non-US equities - The [Vanguard FTSE 100 UCTIS ETF](https://www.ig.com/en/shares/markets-shares/vanguard-ftse-100-uctis-etf) tracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation - The Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry - The WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex - The [iShares US Energy ETF](https://www.ig.com/en/shares/markets-shares/dj-us-energy-sector-index-fund---iye-IYE-US) tracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector ## How to pick the right ETF for you With so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF: ### The type of ETF There are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short. Take a look at the [different types of ETF](https://www.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them#ETF-types) below. ### The ETF’s size Assets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less. ### The structure of ETFs There are two main types of ETF available. Physical ETFs, which use assets to track the underlying market, and synthetic ETFs which use derivatives. Both have advantages and limitations which you should consider before taking a position. For example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable. ## Types of ETF ![Types of ETF](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/ETF_Cluster/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-02.png/jcr:content/renditions/original-size.webp) ### Stock index ETFs Stock index ETFs are funds that track the performance of a given index. As [stock indices](https://www.ig.com/en/indices) are nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price. ETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would [track the performance of the FTSE 100](https://www.ig.com/en/indices/how-to-trade-invest-ftse-100), and would either hold physical shares of the index’s constituents, or products that mimic its price movements. ### Currency ETFs Currency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies. You can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk. ### Sector and industry ETFs A sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more. Like currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF. ### Commodity ETFs Commodity ETFs usually take their price from futures contracts, rather than containing the physical commodity. It’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry. ### Geographic ETFs Geographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio. ### Inverse or short ETFs Inverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF. You’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets. ### Leveraged ETFs Leveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a \$2 exposure to the underlying asset for every \$1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full \$ exposure, so losses or profits could far outweigh your initial capital. ## How to take a position on ETFs ### Trading an ETF with derivatives Trading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with [CFDs](https://www.ig.com/en/cfd-trading/what-is-cfd-trading-how-does-it-work), you can use leverage to get amplified exposure to the ETF of your choice. As a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a [risk management](https://www.ig.com/en/risk-management) strategy before you trade. ## FAQs How does an ETF work? ETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors. These investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns. What is the difference between ETFs and shares? A share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an [initial public offering (IPO)](https://www.ig.com/en/shares/ipos/how-to-trade-ipo). When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights. ETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets. Discover [IPO trading](https://www.ig.com/en/shares/ipos/how-to-trade-ipo) and the [upcoming IPOs](https://www.ig.com/en/shares/ipos/upcoming-ipos) to watch. How is an ETF price determined? An ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing. ![How is an ETF price determined](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/Hero/Rebrand_Batch_5/UK_etf-equation.jpg/jcr:content/renditions/original-size.webp) The percentage change in the ETFs price is what matters, not the actual price. How do ETFs make money? There are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks. ETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately. ## Develop your knowledge of financial markets Find out more about a range of markets and test yourself with IG Academy’s online courses. ![IG Academy](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/UK_PSO_academy-device-image.jpeg/jcr:content/renditions/original-size.webp) ## Try these next Trade 700 US shares 24/51, and \#us\#extendedhours\##+ US shares in extended hours. Discover upcoming IPOs and how to trade grey markets with us. Learn how to trade shares with our step-by-step guide. 1 Trading hours run from Monday 8am to Saturday 5am (UTC +8). 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Readable Markdown	## What is an exchange traded fund (ETF)? An exchange traded fund (ETF) is an investment instrument that tracks the performance of an existing market or group of markets. The fund will either physically buy the assets it is tracking or use more complicated investments to mimic the movement of the underlying market. ETFs are bought and sold on a stock exchange – in much the same way as [stocks](https://www.ig.com/en/shares/what-are-shares). They perform a similar function to [indices](https://www.ig.com/en/indices/what-are-indices-how-do-you-trade-them), investment trusts and other exchange traded products. You can trade an ETF to track a sector, an index, stocks from a specific country, a commodity, a currency or fixed income markets. Many ETFs are designed to track the underlying assets, but some funds hand pick the assets they track. With IG you can trade ETFs via [CFDs](https://www.ig.com/en/cfd-trading/what-is-cfd-trading-how-does-it-work). ![ETF shares](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/ETF_Cluster/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-01.png/jcr:content/renditions/original-size.webp) ### Popular ETFs to watch - The [iShares Core S\&P 500 ETF](https://www.ig.com/en/shares/markets-shares/sp-500-index-fundus---ivv--IVV-US) tracks the S\&P 500 index, which measures the performance of large-cap US stocks - The [Vanguard Total International Stock ETF](https://www.ig.com/en/shares/markets-shares/vanguard-total-international-stock-etf) (VXUS), which invests in global stocks, excluding US, listed on the FTSE Global All Cap Index - The [iShares Core MSCI Total International Stock ETF](https://www.ig.com/en/shares/markets-shares/ishares-core-msci-world-all-cap-etf) tracks the results of large-, mid- and small-cap non-US equities - The [Vanguard FTSE 100 UCTIS ETF](https://www.ig.com/en/shares/markets-shares/vanguard-ftse-100-uctis-etf) tracks the performance of the FTSE 100 stock index, which is comprised of the UK’s top 100 companies by market capitalisation - The Global X Cannabis ETF tracks the cannabis index, which provides exposure to companies that are active in the cannabis industry - The WisdomTree WTI Crude Oil ETF gives indirect exposure to crude oil prices by tracking the Bloomberg crude oil subindex - The [iShares US Energy ETF](https://www.ig.com/en/shares/markets-shares/dj-us-energy-sector-index-fund---iye-IYE-US) tracks the results of the Dow Jones US oil and gas index, which measures the performance of companies in the US oil and gas sector ## How to pick the right ETF for you With so many ETFs to choose from, it’s important that you pick the right ETF for you and your trading goals. There are three main things to consider when choosing your ETF: ### The type of ETF There are so many different ETFs available, not just in the assets type you can track - stocks, currencies, commodities and so on - but also whether your exposure is leverage, or is long or short. Take a look at the [different types of ETF](https://www.ig.com/en/shares/etfs/what-are-etfs-how-do-you-trade-them#ETF-types) below. ### The ETF’s size Assets under management (AUM) is the total value of investments held within an ETF. Larger funds often have better liquidity than smaller ones, which means they have lower spreads – saving you money in the long run as you can open your position for less. ### The structure of ETFs There are two main types of ETF available. Physical ETFs, which use assets to track the underlying market, and synthetic ETFs which use derivatives. Both have advantages and limitations which you should consider before taking a position. For example, physical replication makes it easier to see what you are invested in and is generally considered less risky than synthetic replication. However, there are some markets where physical replication is impossible or hugely inefficient. In which cases, synthetic replication provides exposure to markets that would be otherwise unavailable. Types of ETF ![Types of ETF](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/ETF_Cluster/MDE-5547_SEO%20-%20UK%20Cluster%20Page%20-%202%20New%20Graphics-02.png/jcr:content/renditions/original-size.webp) ### Stock index ETFs Stock index ETFs are funds that track the performance of a given index. As [stock indices](https://www.ig.com/en/indices) are nothing more than a number representing a group of shares, traders and investors have to find ways to trade on their price. ETFs enable you to gain exposure to an entire index from a single position. For example, a FTSE 100 ETF would [track the performance of the FTSE 100](https://www.ig.com/en/indices/how-to-trade-invest-ftse-100), and would either hold physical shares of the index’s constituents, or products that mimic its price movements. ### Currency ETFs Currency ETFs enable you to gain exposure to the forex market, without having to buy or sell the underlying currencies. In some cases, these ETFs will only track a single currency, but for the most part they track baskets of currencies. You can use currency ETF to trade the economic health of regions – such as the EU – or emerging market economies. They can also be used as hedge against inflation and foreign asset risk. ### Sector and industry ETFs A sector or industry ETF tracks an index of companies operating within the same industry. For example, the AI and robotics sector has the Robo-Stox Global Robotics & Automation Index ETF, which tracks stocks related to autonomous transportation, robotics and automation, and more. Like currency ETFs, sector ETFs can be used to take advantage of changes in an economy’s health and as a hedge against any existing positions. If you have significant risk in a particular sector, you might choose to mitigate this risk by shorting a sector ETF. ### Commodity ETFs Commodity ETFs usually take their price from futures contracts, rather than containing the physical commodity. It’s important to note that there is a difference between commodity ETFs and commodity-linked ETFs, such as the sector ETFs described above. Commodity ETFs emulate the price of the underlying commodity, whereas commodity-linked assets track companies within the industry. ### Geographic ETFs Geographic ETFs enable you to track assets in a specific region. For example, you can trade in a US ETF that grants you exposure across all the US indices, a North American ETF that includes Canadian companies, or an international ETF if you’re looking to diversify your portfolio. ### Inverse or short ETFs Inverse ETFs move in the opposite direction to the underlying asset. They can be found in any of the above categories of ETF. You’d use an inverse ETF as a means of opening short positions on the market. They can be useful hedges for existing long positions, or as a way of speculating on falling markets. ### Leveraged ETFs Leveraged ETFs are designed to mirror an underlying asset but use financial derivatives to amplify investors’ exposure. For example, a leveraged 2x ETF would maintain a \$2 exposure to the underlying asset for every \$1 of investor capital. When using a leveraged instrument, losses can also be magnified. This is because losses (and profits) are calculated based on the full \$ exposure, so losses or profits could far outweigh your initial capital. How to take a position on ETFs ### Trading an ETF with derivatives Trading ETFs is a great way to get exposure to shorter-term price movements within certain sectors. When you trade ETFs with [CFDs](https://www.ig.com/en/cfd-trading/what-is-cfd-trading-how-does-it-work), you can use leverage to get amplified exposure to the ETF of your choice. As a result, CFDs enable you to open a position for just a fraction of the cost of traditional investing. This means that, while leverage can magnify your profits, it can also magnify your losses. This is because loss is calculated based on the full size of the position rather than the cost of opening that position and can far outweigh any initial deposit, so it is important to create a [risk management](https://www.ig.com/en/risk-management) strategy before you trade. FAQs How does an ETF work? ETFs work in much the same way as stocks. A fund manager will design an ETF to track the performance of an asset or group of assets, and then sell shares in that fund to investors. These investors then own a portion of an ETF, but do not have any rights to the underlying assets in the fund. Instead, ETFs track the value of the underlying, and provide investors with near-identical returns. What is the difference between ETFs and shares? A share is a portion of a company that can be bought or sold after it has listed on a stock exchange via an [initial public offering (IPO)](https://www.ig.com/en/shares/ipos/how-to-trade-ipo). When you own a stock, you own a portion of that company – this means you could receive dividends if they are paid and will gain voting rights. ETFs are traded in a similar way to stocks, but they track an underlying asset or basket of assets. They can track a range of markets, including company stocks, indices and commodities, but would not entitle the holder to own those underlying assets. Discover [IPO trading](https://www.ig.com/en/shares/ipos/how-to-trade-ipo) and the [upcoming IPOs](https://www.ig.com/en/shares/ipos/upcoming-ipos) to watch. How is an ETF price determined? An ETF’s price is determined by the value of the fund’s underlying assets, known as the net asset value (NAV), and not by the fund’s market price. NAV is calculated as the ETF asset value minus the ETF liability value, divided by the number of shares in circulation. So, if just one of these values change, the NAV will also change. This is why supply and demand for an asset or market, for example the FSTE 100, can also play a part in pricing. ![How is an ETF price determined](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/Rebrand/Hero/Rebrand_Batch_5/UK_etf-equation.jpg/jcr:content/renditions/original-size.webp) The percentage change in the ETFs price is what matters, not the actual price. How do ETFs make money? There are two parts to this question: how traders or investors make money from ETFs, and how ETF providers make money. Traders and investors can make money from an ETF by selling it at a higher price than what they bought it for. Investors could also receive dividends if they own an ETF that tracks dividend stocks. ETF providers make money mainly from the expense ratio of the funds they manage, as well as through transaction costs. An expense ratio is the amount you pay to hold an ETF – it normally comes out of the funds performance and is not charged to traders and investors separately. ## Develop your knowledge of financial markets Find out more about a range of markets and test yourself with IG Academy’s online courses. ![IG Academy](https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/UK_PSO_academy-device-image.jpeg/jcr:content/renditions/original-size.webp) Try these next Trade 700 US shares 24/51, and \#us\#extendedhours\##+ US shares in extended hours. Discover upcoming IPOs and how to trade grey markets with us. Learn how to trade shares with our step-by-step guide. 1 Trading hours run from Monday 8am to Saturday 5am (UTC +8). During daylight savings, hours shift to 6am Monday to 3am Saturday (UTC +8).
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