ETFs continue their innovation, offering active management and funds of funds (an ETF pursuing a strategy by investing in other ETFs). Some go further out along the risk continuum with the advent of synthetic ETFs, for which return comes from a swap rather than an index, ETNs (exchange traded notes), which hold fixed income, and ETVs (exchange traded vehicle), which are similar to ETNs but issued through a special purpose vehicle to gain access to more opaque markets; here counterparty risk exists. Finally, there are leveraged ETFs and inverse ETFs that track the opposite performance of an index, effectively making a directional bet. The aforementioned suite of products is best reserved for the more sophisticated risk-aware investor.

Related Reading:



Shortcomings

Related Articles
  1. Financial Advisor

    What Your Clients Must Know About ETFs

    Like any investment, ETFs come with some fine print. Here is what advisors should reveal to their clients about these hugely popular products.
  2. ETFs & Mutual Funds

    Exchange-Traded Funds (ETFs)

    This vehicle combines the diversification of a mutual fund with the flexibility of a stock. Learn more about them here.
  3. ETFs & Mutual Funds

    Want ETFs But Hate To Buy And Hold? Try Active ETFs

    Choosing between passive and active ETFs depends on your beliefs about active management's value.
  4. ETFs & Mutual Funds

    How To Pick The Best ETF

    Of the hundreds of exchange-traded funds on the market, some are bound to fail. Learn how to pick the best of the bunch.
  5. ETFs & Mutual Funds

    The Advantages of ETFs Compared to Index Funds

    With the ongoing ETF boom, ETFs gain more variety and increased competition in the market leads to further investors' advantages compared to index funds.
  6. ETFs & Mutual Funds

    What to Watch Out for When Investing with ETFs

    ETFs have become a popular vehicle for various investment objectives, but that doesn't mean they're totally free of drawbacks.
  7. ETFs & Mutual Funds

    Exchange-Traded Funds: ETF Alternative Investments

    Although fixed income and equity investments are the core of a diversified portfolio, the use of alternative asset classes can provide additional diversification. These alternative investments ...
  8. ETFs & Mutual Funds

    Exchange-Traded Funds: Introduction

    Exchange-traded funds (ETFs) can be a valuable component for any investor's portfolio, from the most sophisticated institutional money managers to a novice investor who is just getting started. ...
  9. Investing

    A Look At the Growth Of the ETF Industry

    Explore the phenomenal growth rate of the ETF industry, and learn some of the principal reasons why ETFs are projected to continue to grow at a rapid pace.
  10. ETFs & Mutual Funds

    Building An All-ETF Portfolio

    Balance is the key when selecting an all-ETF portfolio that will hedge against market volatility.
Trading Center