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Investing 101: Understanding ETFs

looking at a sheet

First launched in the 1990s, exchange-traded funds (ETFs) have quickly become a key tool for Americans building a secure financial future. ETFs in the US have already amassed nearly $7 trillion in combined assets and have become a staple of retirement and other investment accounts. 

What’s behind the popularity of ETFs? For starters, they generally have very low fees, can offer tax benefits, and allow you to diversify your portfolio without having to buy individual securities.

Like mutual funds, ETFs provide a proportionate share in a pool of assets, such as stocks and bonds. They can also be traded by anyone with a brokerage account, making them highly accessible. However, ETFs differ from their traditional fund counterparts in several ways. Most notably, ETFs can be bought and sold throughout the trading day. 

A vast range of investment strategies are available in ETF form—including those focused on certain asset classes, sectors, or geographies. Many ETFs are passively managed, meaning they seek to track the performance of a given index, like the S&P 500. This approach differs from that of actively managed funds, which aim to beat an index’s returns through research-driven investment decisions. However, many investors buy and sell ETFs “actively” as an expression of their views on the market. 

No matter your investment style, objectives, or preferences, there is likely an ETF for you.

Unfortunately, policymakers in Washington, DC have devised schemes to change the way ETFs and other funds operate. Their proposals, if approved, could ultimately limit investment options for you and millions of other Americans, potentially making it more difficult to reach your financial goals. 

That’s why Secure Financial Future is giving a voice to investors like you. We’re leading the charge to protect your hard-earned investment savings from bad ideas coming out of Washington, while supporting policies that enable you to invest easily and in accordance with your objectives and values.

Click here to join our action network as we seek to empower investors in their quest for a Secure Financial Future.