The first exchange-traded fund (ETF) came into the American financial markets in 1993 when State Street Global launched the SPDR S&P 500 (NYSE:SPY). With an average volume of over 200 million shares traded, this original ETF is still the most popular ETF traded today - but that doesn't mean it gives the best returns.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
One of the biggest advantages of ETFs is that an investor can create a diversified portfolio with a handful of different ETFs to cover the entire stock and fixed income market. Likewise, for investors who already have a sizable portfolio of individual stocks, more specialized ETFs can be a great way to augment holdings and provide entry into a wide variety of sectors, commodities, small-caps, and emerging markets. Buying an ETF to represent an entire sector of the stock market can also be a great idea to ride out a bullish trend on a specific sector.
SEE: Introduction To Exchange-Traded Funds
Sound appealing? Check out some of this year's hottest ETFs.
|iShares Silver Trust (NYSE:SLV)||Silver||+11.17%|
|Health Care Select Sector SPDR (NYSE:XLV)||Health Care||+7.40%|
|Vanguard Health Care ETF (NYSE:VHT)||Health Care||+9.46%|
|iShares Dow Jones US Healthcare (NYSE:IYH)||Health Care||+8.49%|
If you're looking to add a new twist to your portfolio, as well as reduce taxes on your ETF gains, dive into some additional research on these leading products.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!