At the start of 2018, ETFs across the globe managed about $4.75 trillion. ETFs were already bigger than the entire hedge fund industry. Today, global ETF assets have ballooned to $6.3 trillion. Globally, 219 providers launched 867 ETFs in 2019 alone. U.S. regulators recently eased regulations to launch exchange-traded funds. Expect the number of ETFs to soar in the years ahead.
ETFs offer an massive range of asset classes, investment philosophies and niche trading strategies. In the world of investing, ETFs allow you to custom build any portfolio you want.
ETFs trade like stocks and the price changes throughout the day. You are able to buy and sell ETFs in your brokerage account at the click of a mouse. At most brokerages, you can invest in ETFs at very low fees or even for free. Technically, each ETF is an index fund. Each index tracks a major asset class, including stocks, bonds, fixed income, commodities and currencies, as well as derivatives such as options and futures. Leveraged ETFs offer double or triple leverage on indexes and specific asset classes for short-term traders. ETFs allow you to bet on these indexes or against them. ETFs may also enjoy tax advantages over mutual funds.
ETFs allow you to invest in just about everything, from blockchain, bitcoin, leveraged bets on gold to short bets on Brazilian stocks.
With more than 2,000 ETFs trading on U.S. stock exchanges alone, the choice is bigger than you probably think.
Sven Franssen