ETF Investing: ETF Investments, Investments in Exchange Traded Funds

As a reader of the site, most of the regular readers may have observed that we favour a lot of ETF Investments, ETF Investing or Exchange Traded Funds Investing. In this article, we will once again look at some summarize results of why ETF investing is the best bet in the market and why you must stick to ETF for long term returns. Let's look at the different trypes of ETF's.

What are the different Types of ETF or Exchange Traded Funds available in the market?
The following are the various types of ETF's available:

Index ETFs: These are the ETF's which attempt to match the performance of the underlying stock index or index of other related underlying.

Commodity ETFs: Typically, the ETF's which invest in commodities (for e.g. a Gold ETF ). ALong with spot commodities, they may additionally invest in commoditiy futures as well, as a part of hedging or arbitrage.

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Currency ETFs: These are ETF's specific to currency trading. For e.g. NYSE listed CurrencyShares Euro Trust FXE or DB MONEY £ DB X-TRACKERS £ MONEY MKT ETF CAP XGBP. Though it is considered that currency ETF's are still in infancy and are not yet available in emerging markets like India.

Hedge Fund ETFs: These are the kind of ETF's which track a given hedge fund as an underlying. A compartively new concept.

All in all, the ETF's irrespective of which category they belong to, offer a combined benefit of Security, Liquidity, transparency & low costs of investments. Though there are still substantial risks related to investing in ETF, but they are still comparatively lower than that of investing in stocks and mutual funds based on end of the day NAV