Q. Do all ETFs closely track the underlying indexes' performances?
A. No. While ETFs started with tracking some well known indexes, such as S&P 500 index and Nasdaq 100 index, financial innovation has led to many different types of ETFs. For examples -
Market cap-weighted vs. Non-market-cap weighted
Traditional ETFs tend to track market value-weighted indexes such as S&P 500 index, but many new ETFs follow indexes that are constructed using other measures, such as a company's total earnings or its dividend history.
Passively managed vs. Actively managed
Traditional ETFs tend to be passively managed index funds, many new ETFs are actively managed with the goal to outperform the underlying indexes.
Mirror index vs. Leveraged or Inverse Index
Traditional ETFs try to mirror the underlying indexes' performances, the leveraged or inverse ETFs try to achieve multiples or best the other direction of the indexes' performances.
In our resource page, there is a list of ETFs organized by different categories. Note that the list is outdated, but it should give you a starting point if you are interested in exploring the different types of ETFs.
A. No. While ETFs started with tracking some well known indexes, such as S&P 500 index and Nasdaq 100 index, financial innovation has led to many different types of ETFs. For examples -
Market cap-weighted vs. Non-market-cap weighted
Traditional ETFs tend to track market value-weighted indexes such as S&P 500 index, but many new ETFs follow indexes that are constructed using other measures, such as a company's total earnings or its dividend history.
Passively managed vs. Actively managed
Traditional ETFs tend to be passively managed index funds, many new ETFs are actively managed with the goal to outperform the underlying indexes.
Mirror index vs. Leveraged or Inverse Index
Traditional ETFs try to mirror the underlying indexes' performances, the leveraged or inverse ETFs try to achieve multiples or best the other direction of the indexes' performances.
In our resource page, there is a list of ETFs organized by different categories. Note that the list is outdated, but it should give you a starting point if you are interested in exploring the different types of ETFs.
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