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Last updated on September, 17

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2021 Rankings

Best Exchange Traded Funds

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ETFs are a great way to diversify your portfolio. You can invest in an ETF that tracks the performance of any index, commodity, or basket of stocks you choose. Learn more information about exchange traded funds today!

Frequently Asked Questions on Exchange Traded Funds

What type of orders can I place in exchange traded funds? 

There are different orders you can place on exchange traded funds to help you make the most out of your investment. Here are a few orders that will surely make your trading easier.Limit orders: This order ensures that you get investments within the range you set. Assets will only be sold and bought at the maximum and minimum price range you establishMarket orders: Market orders automatically executes the investment at the best available price. However, you have no control over the price range in this type of order.Stop orders: This order lets you set a trigger price wherein when the exchange traded fund price moves higher than your trigger, a market order is automatically created.Stop-limit orders: Stop limit order lets you set a trigger price wherein a limit order will automatically be created once the price goes down beyond your trigger.

What makes the market price different from the net asset value of exchange traded funds?

Since the prices of exchange traded funds are influenced by supply and demand, changes in the market forces can adversely affect the market price. It makes the market prices go above or below the net asset value, known as premium or discount. 

What is the best way to learn about exchange traded funds?

The best way to learn about exchange traded funds is by research. Since it’s a popular investment due to its easy trading process and transparency, you'll see a wide range of materials available on the subject matter. You can even read exchange traded funds for dummies in books or web article forms. You can also check out the list of exchange traded funds should you want to learn more about high rated funds.

What are the benefits of exchange traded funds versus index funds? 

Exchange traded funds are more accessible to trade than index funds because trading is done within a stock exchange. Assets in exchange traded funds can also be sold throughout the day, compared to index funds' once a day trading. Lastly, the ticket size for exchange traded funds is significantly smaller due to the passive management benefit. 

Are there actively managed exchange traded funds?

Yes, there are actively managed exchange traded funds. Though these are actively managed, the fund manager intervention is only during sector allocations, market time trades, and index deviations. Compared to mutual funds, exchange traded managed funds may still fall short on fund manager intervention. Nevertheless, this passive management will reap the benefit of lower fees. 

How are risks minimized in exchange traded funds versus mutual funds?

Both exchange traded funds and mutual funds minimize their risks by diversifying their portfolios. However, exchange traded funds use intraday trading to frequently buy and sell assets at fair prices and ensure that profit will still keep coming. Also, by maintaining a high level of activity, exchange traded funds neutralize any potential losses.

Are exchange traded funds secure?

The Securities and Exchange Commission heavily regulates exchange traded funds. Reports say that there have been no significant cases reported yet of an investor losing money in exchange traded funds due to fraud. Though fraud is unlikely, exchange traded funds still have potential risks and losses, just like other investments.

Will high rated funds have the best performance?

The scores assigned to exchange traded funds do not indicate future performance. It just shows how well certain funds match the broad market within its segment. It guides you in making market calls, but not necessarily where to invest. If you're a new investor, remember to consult your fund manager regarding promising exchange traded funds. 

What is the exchange traded funds' classification system?

An exchange traded fund classification system is a hierarchical system used for classifying exchange traded funds. It provides means for organizing and screening thousands of exchange traded funds to identify those who compete in different market segments. 

What is a segment benchmark?

A segment benchmark is an index that best represents the segment. These segment benchmarks will be judged based on how close their returns are to the segment benchmark to know the highest rated exchange traded funds. These scores will then determine how certain exchange traded funds will match the segment market. 

With hundreds of exchange traded funds in the market, where do I start?

If you have an existing investment portfolio, you can add almost any type of exchange traded funds to supplement that. However, if you’re still a newbie in investments, you might want to consider stocks and bonds first since they are broad asset classes that can help you minimize potential risks. In case you want higher incomes, it wouldn’t hurt to add some commodity and real estate assets to increase potential profits.

What is the best place to buy exchange traded funds?

The best place to buy exchange traded funds is a reputable financial supermarket. The marketplace allows you to hold exchange traded funds together with other investments such as mutual funds, stocks, and bonds with just one account.In case you want assisted trading, you can also seek services from brokerage houses to get the best suggestions. Since the marketplace can be highly volatile and unpredictable, brokerage firms can help you make the first steps. 

Is there a good and bad time to buy exchange traded funds?

There is no perfect and unfavorable time to buy exchange traded funds. Because market prices tend to go up and down regardless of how good or bad a day, week, or month has been, you can never really predict the best timing. Nevertheless, you can observe the market trends and create forecasts when you should buy or sell. 

Can I trade options in exchange traded funds?

Several options can be traded in exchange traded funds. These options are used to create investment strategies in line with the underlying assets, letting investors use leverages or borrowed money in their portfolios. They can use these leverages to finance assets or invest in business operations anticipating a higher shareholder value in the future. 

Are exchange traded funds transparent?

Since exchange traded funds hold the same securities as their benchmark, you'll know what you're investing in. You’ll see a complete picture of the holdings on the provider's website. Also, since the trades happen throughout the day, the numbers are flashed across computer screens worldwide. You can easily monitor any movement in the market. 

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