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Tuesday, September 29, 2020
Three Common Types of ETFs
A resident of North Andover, Massachusetts, Lucas “Luke” Noble provides comprehensive financial and estate planning services to businesses and individuals through Noble Financial Group, LLC. The owner and CEO of the company, Lucas Noble and his team in North Andover support clients with things such as exchange-traded funds (ETFs).
ETFs are a collection of securities (like bonds, stocks, and commodities) that are traded on the exchange, similar to a stock. The provider of the fund owns the underlying assets, while shareholders own a part of the fund. There are several types of ETFs, and they are categorized by the types of investments they hold. Here are a few examples:
Commodity ETFs
Raw goods that are bought and sold, like coffee and gold, are commodities. These items can be bundled into a single investment via a commodity ETF. These ETFs typically focus on either a single commodity or investments in futures contracts, which are agreements to sell or purchase an asset at a future date.
Bond ETFs
These types of ETFs are commonly used to generate cash payments for investors since they do not have maturity dates. Bond ETFs are a lower-risk complement to stock ETFs, and are capable of generating payments for investors from the interest that gathers on the bonds contained within the fund.
Currency ETFs
In recent years, the US dollar has lost some of its strength as a reserve currency. At the same time, currencies around the world have become more volatile. In light of this, investors seeking to protect the value of their US-denominated investments may seek out currency ETFs. Such vehicles also grant regular investors easy exposure to the foreign exchange market.
ETFs are a collection of securities (like bonds, stocks, and commodities) that are traded on the exchange, similar to a stock. The provider of the fund owns the underlying assets, while shareholders own a part of the fund. There are several types of ETFs, and they are categorized by the types of investments they hold. Here are a few examples:
Commodity ETFs
Raw goods that are bought and sold, like coffee and gold, are commodities. These items can be bundled into a single investment via a commodity ETF. These ETFs typically focus on either a single commodity or investments in futures contracts, which are agreements to sell or purchase an asset at a future date.
Bond ETFs
These types of ETFs are commonly used to generate cash payments for investors since they do not have maturity dates. Bond ETFs are a lower-risk complement to stock ETFs, and are capable of generating payments for investors from the interest that gathers on the bonds contained within the fund.
Currency ETFs
In recent years, the US dollar has lost some of its strength as a reserve currency. At the same time, currencies around the world have become more volatile. In light of this, investors seeking to protect the value of their US-denominated investments may seek out currency ETFs. Such vehicles also grant regular investors easy exposure to the foreign exchange market.
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