Do you ever feel like there's a building full of people whose sole duty is to make investing as difficult as possible? If you're frustrated with all of the different investment options, you're not alone. Fortunately, there are some exchange traded funds that didn't make it to that complicated building. If you're just getting started as an investor, consider these ETFs.

TUTORIAL: Exchange-Traded Funds


SPDR S&P 500
Find any seasoned ETF investor and say the word, "spider" to them and they'll probably say something about the SPDR S&P 500 (NYSEARCA:SPY). The SPY tracks the performance of the S&P 500. Many investors may not have the experience or knowledge to pick individual stocks, so the SPY provides access to all 500 stocks in the S&P index, eliminating the need to choose. It's also the most highly-traded ETF, with more than 250 million shares changing hands daily.


SPDR Gold Trust
If you want to get in on the rising price of gold, but you don't want to own the physical metal, let the SPDR Gold Trust (NYSEArca:GLD) do it for you. The trust holds over 40 million of the precious metal in London, England. Keep in mind, however, that owning a gold ETF isn't the same as owning actual gold, but this highly popular ETF is a staple in portfolios all over the world.

PowerShares QQQ Trust
The PowerShares QQQ Trust (Nasdaq:QQQ) is referred to as "The Qs" by traders. This ETF invests in the NASDAQ 100 index and is used as a way to track the performance of some of the most popular technology companies. For the investor who wants to have a larger technology weighting in his or her portfolio, The Qs is the most popular way to do it.

iShares Russell 2000
The iShares Russell 2000 (NYSEArca:IWM) is where you go if you want an ETF that tracks the performance of some of the thousands of the small companies that are publicly traded. Small-cap companies are more sensitive to the overall stock market, so investing in the IWM isn't for those with a low-risk tolerance. However, these smaller companies have given investors larger opportunities for growth than larger companies that have already gone through their financial growth spurts.

The Other Spiders
Within the family of the SPDR ETFs there are a large amount of offerings that track the performance of all of the different sectors of the economy. The most popular of these select sector ETFs are the Financial Select Sector ETF (NYSEArca:XLF), Industrial Select Sector ETF (NYSEArca:XLI) and the Consumer Discretionary Select Sector ETF (NYSEArca:XLY); all of which track the sectors where they derive their namesakes.

The Bottom Line
The above ETFs are not only easy to understand, but are among the most popular with investors. Even the most seasoned money managers gravitate towards financial products that are easy to understand. Investors of all skill levels should resist the urge to look for more complicated products. In the case of investing, the popular cliché of "less is more" certainly applies.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares Asia 50

    Read more about BlackRock's iShares Asia 50 Fund, an ETF that follows the four "Asian Tiger'' nations plus China.
  2. Mutual Funds & ETFs

    ETF Analysis: WisdomTree International LargeCp Div

    Learn more about the WisdomTree International LargeCap Dividend fund, an income-based international equities ETF that focuses heavily on the United Kingdom.
  3. Mutual Funds & ETFs

    ETF Analysis: United States Gasoline Fund

    Learn about the United States Gasoline Fund, the characteristics of the exchange-traded fund, and the suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: United States 12 Month Oil

    Find out more information about the United States 12 Month Oil ETF, and explore detailed analysis of the characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Nasdaq Biotechnology

    Find out information about the ProShares Ultra Nasdaq Biotechnology exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
  6. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily S&P Biotech Bull 3X

    Learn more about the Direxion Daily S&P Biotech Bull 3x exchange-traded fund, a new triple-leveraged ETF tracking biotechnology equities.
  7. Mutual Funds & ETFs

    ETF Analysis: First Trust Health Care AlphaDEX

    Learn more about the First Trust Health Care AlphaDEX exchange-traded fund, an indexed fund that uses an advanced stock selection methodology.
  8. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI Emerging Mkts

    Learn more about the PowerShares FTSE RAFI Emerging Markets ETF, a fundamentally weighted fund that tracks emerging market equities.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares Cali AMT-Free Muni Bond

    Learn more about the iShares California AMT-Free Municipal Bond exchange-traded fund, a popular tax-advantaged ETF that dominates its category.
  10. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Dividend

    Learn more about the SDPR S&P Emerging Markets Dividend Fund, a yield-focused exchange-traded fund tracking global emerging economies.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Lion economies

    A nickname given to Africa's growing economies.
  4. Factor Investing

    An investment strategy in which securities are chosen based on ...
  5. Nasdaq-100 Pre-Market Indicator

    An index of trading activity based on pre-market open prices ...
  6. Flash Freeze

    A sudden shutdown in trading activity on an exchange. “Flash ...
RELATED FAQS
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  6. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!