Types of Exchange Traded Funds



There are many types of Exchange Traded Funds in the stock market such as:


  • Stock Index’s

  • Commodities which include: Energy, Precious Metals, Agriculture

  • Currencies

  • Stock Industries

  • Bonds

  • Global Exchanges


And within these, there are hundreds of funds to choose from.

I'm going to only explain the Stock Index's and Commodities; specifically Precious metals and Energy.



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Stock Index's

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Stock Index Exchange Traded Funds are ETF's that follow a specific stock benchmark index as closely as possible.

Index ETFs are much like index mutual funds, but whereas the mutual fund shares can only be redeemed at one price daily, the closing net asset value (NAV), index ETFs can be bought and sold throughout the day on exchanges.

Through an index ETF, investors get exposure to a large number of securities in a single transaction.

Index ETFs can cover U.S. and foreign markets, specific sectors, or a specific class of stock (i.e. small-caps, large-caps, etc.) but all incorporate a passive investment strategy, only making portfolio changes when changes occur in the underlying index.



The following are the largest Stock Index ETF's based on an analysis of total assets, as well as the volume and value of shares traded:


    SPDR S&P 500 ETF


    The SPDR S&P 500 ETF is a fund that generally correspond to the price and yield performance of the S&P 500 Large Cap Index, which trade one-tenth the price of the S&P 500.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: SPY

    Fund manager: State Street Global Advisors



    NASDAQ 100 Trust Shares ETF


    The PowerShares QQQQ seeks to replicate the NASDAQ-100 Index, which includes 100 of the largest, most innovative non-financial companies that trade on the NASDAQ Stock Market. It trades at one-twentieth the price of the Index. Formerly known as the NASDAQ-100 Index Tracking Stock or QQQ.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: QQQQ

    Fund manager: Invesco PowerShares



    Dow Diamonds ETF


    The objective of the Trust is to provide investment results that generally correspond to the price and yield performance of the Dow Jones Industrial Average. It trades at one-one hundredth the price of the Index.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: DIA

    Fund manager: State Street Global Advisors



Index Trading System


ETF SystemIf you are looking for a reliable and profitable ETF Trading System that trades Stock Index's, I recommend you look at the Pitbull ETF System.

This is a short term sector trading system which allows you to play market moves UP or DOWN by buying a double index proxy for that sector.

In other words, they return 2X the direction change of the underlying Stock Index ETF.

Typically the average trade runs about 12 days, but in a volatile market you could be out the next day, or in a trending market you might be in for 20 or 30 days.

This Exchange Traded Fund system is brought to you by the Experts who created the Pitbull Breakout System.


Click Here to Learn More



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Precious Metals

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Precious Metals Exchange Traded Funds are ETF'S that reflect the performance of the price of the individual metal, less the Trust's expenses.

The institutions administering the fund, such as StreetTracks for example, the biggest Gold ETF in the USA, hold gold bars in bank vaults "backing" the holdings of their clients.

This is taken to mean that, instead of having to own and cart around gold bars to buy and sell, the ETF fund holds gold bars in trust and you buy a proportion of that gold holding when you open an account with the custodian which is reflected in your account statement.

Therefore, an investor or trader is not buying actual physical gold as if they would be if they buy gold coins or bars from a gold dealer, you are only owning the shares.



The following are the largest Precious Metal Exchange Traded Funds based on an analysis of total assets, as well as the volume and value of shares traded:


    StreetTracks Gold Shares ETF


    The objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: GLD

    Fund manager: State Street Global Advisors



    iShares Silver ETF Trust


    The objective of the iShares Silver Trust is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: SLV

    Fund manager: iShares



As a side-note, although not classed in the Precious Metals fund category, the Metal Miners should be mentioned. They would be classed in the Metal Stock Industry Exchange Traded Funds.


    SPDR S&P Metals and Mining ETF


    The objective of the SPDR S&P Metals and Mining ETF is to replicate as closely as possible the total return performance of the S&P Metals and Mining Select Industry Index.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: XME

    Fund manager: State Street Global Advisors



    Market Vectors Gold Miners ETF


    GDX seeks to replicate the performance of the Amex Gold Miners Index, GDM.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: GDX

    Fund manager: Van Eck Funds



Now I do NOT recommend you Invest long term in these precious metal exchange traded funds, but rather trade them shorter term.

This is because the shares in the fund are owned by a bank or financial institution. Therefore the assets of the shares are vested to the bank, not you.

If the bank doesn't have the amount of metal to back the shares, or if they go bankrupt, you will lose everything.

For a long term investment, you should physically purchase gold and silver.



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Energy

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Energy ETFs consist of either Energy company stocks, such as oil for example, or futures and derivative contracts in order to track the price of oil, or in some cases oil-related indexes.

In the case of the oil Exchange Traded Fund, you do not actually own the oil; the fund consists of futures, options and forward contracts for different oils, gases, and petroleum based-fuels.

So you have exposure to the price of oil, but you don’t have an actual oil rig gushing in your back yard.



The following are the largest Energy Exchange Traded Funds based on an analysis of total assets, as well as the volume and value of shares traded:


    United States Oil Fund ETF


    The investment objective of USOF is for changes in percentage terms of the units' net asset value to reflect the changes in percentage terms of the spot price of West Texas Intermediate ("WTI") light, sweet crude oil delivered to Cushing, Oklahoma ("WTI light, sweet crude oil"), less USOF's expenses.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: USO

    Fund manager: United States Oil Fund, LP



    United States Natural Gas ETF


    The United States Natural Gas Fund LP is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: UNG

    Fund manager: United States Natural Gas Fund



As a side-note, although not classed in the Energy fund category, the Energy Producers should be mentioned. They would be classed in the Stock Energy Industry Exchange Traded Funds.


    Oil Services HOLDRS ETF


    The Oil Service HOLDRS Trust issues depositary receipts called Oil Service HOLDRS, representing an undivided beneficial ownership in the common stock of a group of specified companies that, among other things, provide drilling, well-site management, and related products and services for the oil service industry.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: OIH

    Fund manager: Merrill Lynch, Pierce, Fenner & Smith HOLDRS



    ProShares Ultra Oil & Gas Fund ETF


    The Ultra Oil & Gas seeks investment results generally equivalent to twice (200%) the performance of the Dow Jones U.S. Oil & Gas Index

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: DIG

    Fund manager: ProShares Ultra Oil & Gas Fund



    SPDR S&P Oil & Gas Exploration & Production ETF


    The objective of the SPDR S&P Oil & Gas Exploration & Production ETF is to replicate as closely as possible the total return performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

    It is listed on the U.S. NYSE exchange.

    Ticker symbol: XOP

    Fund manager: State Street Global Advisors



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Getting Started In Exchange Traded Funds

For further in-depth information on Exchange Traded Funds, the book Getting Started In Exchange Traded Funds by Todd Lofton, will show you how ETFs are created, how to evaluate an ETF’s performance, and where to look for an Exchange Traded Fund that best matches your investment objectives.

In addition, it will also provide you with some help in actual day-to-day buying and selling. It will demonstrate how to use basic technical analysis to forecast probable movements in Exchange Traded Funds prices, explain how options work, and options on Exchange Traded Funds can be used to enhance success. The book will review the importance of good money management, outlining the steps that you can take to curtail losses and let profits run.


Learn more here.





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