{"id":712652,"date":"2023-10-22T14:52:49","date_gmt":"2023-10-22T11:52:49","guid":{"rendered":"https:\/\/www.etoro.com\/?page_id=712652"},"modified":"2025-11-03T15:22:53","modified_gmt":"2025-11-03T13:22:53","slug":"types-of-etfs","status":"publish","type":"page","link":"https:\/\/www.etoro.com\/en-us\/investing\/types-of-etfs\/","title":{"rendered":"Types of ETFs"},"content":{"rendered":"\n<div class=\"wp-block-etoro-card wp-block-etoro-card-size-small wp-block-etoro-card-thumbnail-position-side wp-block-etoro-card-default\"><img decoding=\"async\" src=\"https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/iShares_Small_Spec_Wordmark.png\" alt=\"\" class=\"wp-block-etoro-card-thumbnail\"\/><div class=\"wp-block-etoro-card-body\"><div class=\"wp-block-etoro-card-content\">\n<p class=\"is-style-default\">In collaboration with<br><strong>iShares by BlackRock, a global leader in ETFs<\/strong><\/p>\n<\/div><\/div><\/div>\n\n\n\n<p class=\"is-style-summary\">ETFs allow you to easily diversify your portfolio, providing access to different asset classes, such as stocks, bonds, commodities and real estate. There are many different types of ETFs available to invest in, including active and index ETFs, stock ETFs, bond ETFs, commodity ETFs, international ETFs, and thematic ETFs.<\/p>\n\n\n\n\n\n\n<hr class=\"wp-block-separator wp-block-separator-color-dark-grey wp-block-separator-spaces-medium wp-block-separator-weight-1\"\/>\n\n\n\n<p><strong>Learn about the different types of ETFs \u2014 including stock, bond, thematic, and more \u2014 in this beginner\u2019s guide.<\/strong><\/p>\n\n\n<div class=\"ec-video\"><iframe loading=\"lazy\" title=\"Types of ETFs | eToro Academy\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/D2pA_XHNs9M?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n\n\n\n<p><br>Exchange-traded-funds, or ETFs, are an investment product that can provide an<strong> easy, low-cost way <\/strong>to get exposure to broader markets or specific sectors<strong>. <\/strong><em><mark>ETFs typically seek to track the performance of a financial index and can be purchased at any point during the trading day.<\/mark><\/em> <\/p>\n\n\n\n<p>Want to <a href=\"https:\/\/www.etoro.com\/en-us\/investing\/how-to-invest-in-etfs\/\">invest in ETFs<\/a> but don\u2019t know where to start? In this guide, we will broadly <strong>categorize different ETFs and explore the advantages of each one<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Active and index ETFs<\/h2>\n\n\n\n<p>Active ETFs, which seek to <strong>outperform an <e-tip data-tooltip=\"An index is a method used to track the value of a group of usually similar assets over time.\">index<\/e-tip><\/strong>, are managed by professional investors who pick and choose individual stocks, bonds, and other asset classes to include in the fund. This can lead to <strong>higher fees, but potentially higher returns<\/strong>.&nbsp;<\/p>\n\n\n\n<p><em><mark>Active ETFs may be best suited for investors who are looking to generate higher returns in a relatively short amount of time.<\/mark><\/em> <\/p>\n\n\n\n<p>On the other hand, index ETFs seek to simply <strong>track the performance of an index<\/strong>. Index ETFs typically have <strong>lower fees<\/strong> and returns that are more in line with the performance of the index or market they seek to track.&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong><mark><em>Because of their lower fees, index ETFs may be particularly valuable for long-term investors.<\/em><\/mark><\/strong><em><mark> <\/mark><\/em><\/p>\n\n\n\n<p><strong>Active ETFs<\/strong><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-1 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Potential for short-term higher returns:<\/strong> Active ETFs may employ more flexible investment strategies than index ETFs, allowing them to pursue opportunities based upon short-term changes in the market.&nbsp;<\/li>\n\n\n\n<li><strong>In-house investment decisions:<\/strong> A team of fund managers develop the investing strategies used in active ETFs, leveraging tools and resources typically not available for average investors.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Potential for lower long-term returns:<\/strong> There\u2019s a greater chance an active ETF will underperform its benchmark index, as it\u2019s difficult for anyone to outperform the market consistently over a long period of time.<\/li>\n\n\n\n<li><strong>Higher fees:<\/strong> Active ETFs typically require relatively more management than index ETFs and as a result, tend to charge higher fees.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<p><strong> Index ETFs<\/strong><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-2 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Low cost:<\/strong> Index ETFs require relatively less management than active ETFs, and are generally more affordable.&nbsp;<\/li>\n\n\n\n<li><strong>Potential for long-term higher returns:<\/strong> For instance, over a ten-year period ending December 2022, index-tracking strategies, such as those used by a majority of ETFs, have delivered better long-term returns than active strategies.&nbsp;<sup class=\"inline-annotation\">1<\/sup><\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<p><strong>Inflexible investment strategy:<\/strong> Because index ETFs seek to replicate the performance of an index, they typically don\u2019t deviate from the index\u2019s criteria, and may be unable to take advantage of profitable short-term market opportunities.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<p class=\"is-style-disclaimer\"><em><sup class=\"inline-annotation\">1<\/sup>&nbsp;Source: Morningstar. \u201cMorningstar\u2019s U.S\/ Active\/Passive Barometer. Pg. 2. https:\/\/assets.contentstack.io\/v3\/assets\/blt4eb669caa7dc65b2\/bltf38c1fd138e35c1e\/63fcddc6fac83410ca2abf54\/APB_US_2022_Year-End.pdf<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Stock ETFs<\/h2>\n\n\n\n<p>A stock ETF <strong>provides investors with exposure to a diversified portfolio of stocks without having to purchase each one individually<\/strong>. These ETFs are traded on an exchange, and means investors can buy and sell ETF shares throughout the day, just like individual stocks.<\/p>\n\n\n\n<p><mark><em>A stock ETF may be best suited for investors looking to grow their money without the cost and effort of investing in a bunch of individual stocks.<\/em> <\/mark><\/p>\n\n\n\n<p>Stock ETFs can also <strong>provide exposure to specific kinds of stocks<\/strong>. For example , a dividend ETF is a type of stock ETF that can&nbsp; provide exposure to stocks that pay <e-tip data-tooltip=\"A portion of a company\u2019s profit that it pays out to shareholders, based on the company\u2019s performance.\">dividends<\/e-tip>. Dividend ETFs <strong>may be suited for investors who are looking for consistent income<\/strong>.<\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-3 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Higher potential long-term returns:<\/strong> Over the long term, stocks have historically risen higher than other assets, such as bonds, making them a great option to pursue long-term financial goals (see chart below).<sup class=\"inline-annotation\">2<\/sup><\/li>\n\n\n\n<li><strong>Targeted exposure to stocks:<\/strong> Stock ETFs may offer exposure to certain types of stocks, such as dividend stocks, so that you do not need to find and purchase each of these types of stocks on your own.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<p><strong>Risky:<\/strong> Stocks historically experience more <e-tip data-tooltip=\"Volatility is a measure of the markets or stocks\\' unpredicted price changes within a given time.\">volatility<\/e-tip> than other asset classes, such as bonds, which makes investing in stock ETFs riskier than some other investments. <sup class=\"inline-annotation\">2<\/sup><\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<p class=\"is-style-disclaimer\"><em><sup class=\"inline-annotation\">2<\/sup>Source: Morningstar, BlackRock. Stocks are represented by the S&amp;P 500 index from 3\/4\/57 to 12\/31\/22 and the IA SBBI US large stock index from 1\/1\/26 and 3\/4\/57. US bonds are represented by the Bloomberg US Agg Bond TR index from 1\/3\/89 to 12\/31\/22 and the IA SBBI US Gov IT index from 1\/1\/26 to 1\/3\/89. <strong>Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in an index.<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading is-style-heading-3\">Stock vs bond returns since 1926<\/h3>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"366\" src=\"https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-1-Stock-VS-Bond-Returns-3-1024x366.png\" alt=\"\" class=\"wp-image-712981 wp-image-desktop\" srcset=\"https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-1-Stock-VS-Bond-Returns-3-1024x366.png 1024w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-1-Stock-VS-Bond-Returns-3-300x107.png 300w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-1-Stock-VS-Bond-Returns-3-768x274.png 768w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-1-Stock-VS-Bond-Returns-3.png 1400w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Bond ETFs<\/h2>\n\n\n\n<p>Bond ETFs <strong>offer exposure to a bundle of bonds<\/strong> <strong>you can buy and sell like stocks<\/strong>.&nbsp;<\/p>\n\n\n\n<p><em><mark>By holding a bunch of bonds, bond ETFs limit the impact of the negative performance of a single bond on the value of your overall investment. <e-tip data-tooltip=\"Financial instruments that represent a loan from an investor to a borrower, usually a company or government.\">Bonds<\/e-tip> have also historically risen during stock market sell-offs, which could provide additional portfolio protection. <\/mark><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Returns of the Bloomberg US Aggregate Bond Index during market sell-offs<\/h3>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"366\" src=\"https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-2-Returns-of-the-Bloomberg-US-Aggregate-Bond-Indext-During-Market-sell-offs-1024x366.png\" alt=\"\" class=\"wp-image-713002 wp-image-desktop\" srcset=\"https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-2-Returns-of-the-Bloomberg-US-Aggregate-Bond-Indext-During-Market-sell-offs-1024x366.png 1024w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-2-Returns-of-the-Bloomberg-US-Aggregate-Bond-Indext-During-Market-sell-offs-300x107.png 300w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-2-Returns-of-the-Bloomberg-US-Aggregate-Bond-Indext-During-Market-sell-offs-768x274.png 768w, https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/Chart-2-Returns-of-the-Bloomberg-US-Aggregate-Bond-Indext-During-Market-sell-offs.png 1400w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"is-style-disclaimer\"><sup class=\"inline-annotation\">2<\/sup><em>Source: Morningstar. Financial Crisis measured 10\/10\/07 \u2013 3\/9\/09, US Credit Rating Downgrade measured 7\/25\/11 \u2013 10\/3\/11, Energy and EM Downturn measured 7\/21\/15 \u2013 2\/11\/16, Fed Policy Reaction measured 10\/3\/18 \u2013 12\/24\/18, COVID-19 Crisis measured 2\/20\/20 \u2013 3\/23\/20. Diversification and asset allocation may not protect against market risk or loss of principal. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. <strong>Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.Performance data represents past performance and does not guarantee future results.<\/strong><\/em><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-4 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Accessibility:<\/strong> Bond ETFs offer you exposure to bonds, which can be relatively difficult and expensive for investors to access on their own.&nbsp;<\/li>\n\n\n\n<li><strong>Stability:<\/strong> Bonds are historically less risky and offer steadier returns than stocks, which could help stabilize your portfolio.<\/li>\n\n\n\n<li><strong>Potential consistent income:<\/strong> Bonds ETFs offer the potential for investors to earn monthly income, in the form of regular interest payments<\/li>\n\n\n\n<li><strong>Flexibility<\/strong>: You can buy and sell bond ETFs on an exchange, making them more liquid and accessible than standard bonds.&nbsp;<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Lower potential long-term returns:<\/strong> Historically, bonds have delivered lower long-term returns than stocks, which means you may not grow your money as quickly as with stock ETFs.&nbsp;<\/li>\n\n\n\n<li><strong>No guarantee of receiving your initial investment back:<\/strong> When an individual invests in a bond, they typically receive back the amount they invested once the bond matures. When an individual invests in a bond ETF, they are not guaranteed to receive their initial investment back.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<p>Similar to stock ETFs, bond ETFs <strong>can provide exposure to specific kinds of bonds<\/strong> and as Karen Veraa, Head of iShares US Fixed Income Strategy, notes, \u201cbond ETFs can be a low-cost way for you to potentially boost your portfolio income.\u201d<\/p>\n\n\n\n<blockquote class=\"wp-block-quote wp-block-quote-scheme-green is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cBond ETFs can be a low-cost way for you to potentially boost your portfolio income.\u201d <\/p>\n<cite>\u2013 Karen Veraa, US Head of Fixed Income Strategy at iShares <\/cite><\/blockquote>\n\n\n\n<p>For instance, a Treasury ETF provides exposure to bonds<strong> issued by the US federal government. <\/strong>&nbsp;These ETFs may be best suited for <strong>investors with a relatively lower risk tolerance, <\/strong>as bonds issued by the US federal government are generally viewed as less risky than other investments.&nbsp;<\/p>\n\n\n\n<p>Another type of bond ETF is a high-yield bond ETF, which provides investors with<strong> exposure to high-yield bonds, or bonds issued by less <e-tip data-tooltip=\"A bond issuer\\'s ability to pay your investment back. The more creditworthy, the more likely they are to pay you back.\">creditworthy<\/e-tip><\/strong> <strong>businesses or governments<\/strong>.&nbsp;<\/p>\n\n\n\n<p>High-yield bonds typically offer investors the potential for higher returns, and might be best suited for <strong>investors with a relatively higher risk tolerance<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Commodity ETFs<\/h2>\n\n\n\n<p>Commodity ETFs give investors the ability to diversify their portfolios and potentially benefit from price movements in <strong>commodities, <\/strong>or physical assets, like gold, oil, and agriculture.&nbsp;<\/p>\n\n\n\n<p>For instance, a gold ETF or silver ETF seeks to track the value of gold and silver.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Commodity ETFs can be used to<strong> diversify your investments<\/strong>. Historically, commodities have tended to rise in value when other assets, such as stocks and <e-tip data-tooltip=\"Financial instruments that represent a loan from an investor to a borrower, usually a company or government.\">bonds<\/e-tip>, fall in value, offering you the potential to <strong>earn positive returns when other asset classes experience negative returns<\/strong>.&nbsp;<\/p>\n\n\n\n<p><mark>C<em>ommodity ETFs can also be a <e-tip data-tooltip=\"A risk management technique which involves putting on defensive trades to protect your overall returns.\">hedge<\/e-tip> against inflation, as commodities have tended to rise with inflation.<\/em><\/mark><em> <\/em><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-5 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-check\">\n<li><strong>Diversification:<\/strong> Commodities have historically risen in value when other assets, such as stocks and bonds, fall in value, adding diversification to your portfolio and serving as a hedge against inflation.&nbsp;<\/li>\n\n\n\n<li><strong>Offers convenient exposure: <\/strong>Commodity ETFs make it possible to invest in physical assets without having to physically buy or manage them.&nbsp;&nbsp;<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-cross\">\n<li><strong>Higher volatility:<\/strong> Commodity prices may experience higher levels of volatility than traditional asset classes.<\/li>\n\n\n\n<li><strong>Exposure to geopolitical risks: <\/strong>Commodity prices are more heavily impacted by <strong><e-tip data-tooltip=\"Political issues or events involving at least two countries.\">geopolitical<\/e-tip><\/strong> issues and macroeconomic factors than other assets.<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">International ETFs<\/h2>\n\n\n\n<p>International ETFs offer a great way to <strong>invest in companies outside the US and get exposure to foreign markets.<\/strong><\/p>\n\n\n\n<p>Broad-based international ETFs give investors exposure to global growth. Non-US countries account for 85% of global gross domestic product, and is projected to grow to 90% by 2025.&nbsp;<sup class=\"inline-annotation\">3<\/sup><\/p>\n\n\n\n<p class=\"is-style-disclaimer\"><sup class=\"inline-annotation\">3<\/sup> <em>PWC, McKinsey Global Institute, as of January 2020. There is no guarantee that forecasts will come to pass.<\/em><\/p>\n\n\n\n<p>Some international ETFs offer more precise exposure. For instance, an emerging market ETF offers exposure to stocks in emerging markets, such as India, Brazil, and Mexico. The economies of emerging market countries are <strong>projected to become larger than the top seven developed market economies by 2036, and emerging market ETFs can help investors pursue this potential upside<\/strong>. <sup class=\"inline-annotation\">3<\/sup><\/p>\n\n\n\n<p class=\"is-style-disclaimer\"><sup class=\"inline-annotation\">3<\/sup> <em>PWC, McKinsey Global Institute, as of January 2020. There is no guarantee that forecasts will come to pass.<\/em><\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-6 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<ul class=\"wp-block-list wp-block-list wp-block-list-circle\">\n<li><strong>Convenience:<\/strong> Investing in international assets can be time consuming and costly, but international ETFs can provide exposure to entire markets in a single trade.<\/li>\n\n\n\n<li><strong>Diversification:<\/strong> International assets may increase in value during periods when domestic assets may not, helping to stabilize your investments.&nbsp;<\/li>\n<\/ul>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<p><strong>Potential volatility:<\/strong> Non-US countries may have different political and economic structures than the United States, which may create additional levels of volatility for your investments.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Thematic ETFs<\/h2>\n\n\n\n<p>A thematic ETF is <strong>designed to focus on a specific sector or theme<\/strong>, such as environmental sustainability, technology, or healthcare.&nbsp;&nbsp;<\/p>\n\n\n\n<p>A Self-Driving EV and Tech ETF are examples of thematic ETFs which offer exposure to the companies involved in the production and distribution of electric vehicles.<\/p>\n\n\n\n<p><em><mark>By investing in a thematic ETF, you can put your money into companies that are involved in areas you care about, while still benefiting from the diversification that comes with an ETF. <\/mark><\/em><\/p>\n\n\n\n<p>As Jay Jacobs, US Head of Thematics and Active Equity ETFs at iShares, notes, \u201cThematic ETFs can <strong>provide convenient access to the powerful ideas that may transform our economy<\/strong>.\u201d<\/p>\n\n\n\n<blockquote class=\"wp-block-quote wp-block-quote-scheme-green is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThematic ETFs can provide convenient access to the powerful ideas that may transform our economy.\u201d <\/p>\n<cite>\u2013 Jay Jacobs, US Head of Thematics and Active Equity ETFs at iShares <\/cite><\/blockquote>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-top wp-block-columns-2 wp-block-columns-1 is-layout-flex wp-container-core-columns-is-layout-7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-pros\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Advantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<p><strong>Ability to invest in your interests:<\/strong> A thematic ETF can offer targeted exposure to a certain theme allowing you to focus your portfolio on sectors or causes you feel passionate about.&nbsp;<\/p>\n<\/div><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-etoro-pros-cons wp-block-etoro-cons\"><div class=\"wp-block-etoro-pros-cons-title\"><strong>Disadvantages<\/strong><\/div><div class=\"wp-block-etoro-pros-cons-content\">\n<p><strong>Risk:<\/strong> Many thematic ETFs invest in relatively small companies, which may increase the volatility of your overall portfolio. There\u2019s&nbsp; also the potential that a specific theme or sector will fizzle out, increasing the chance you could lose your investment.&nbsp;<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>When it comes to investing in ETFs, you have many options, making it likely you can find an <strong>ETF that aligns with your values and financial goals<\/strong>.&nbsp;<\/p>\n\n\n\n<p>Now that you know some of the common types of ETFs, you can start narrowing down your search.&nbsp; Continue to our <a href=\"https:\/\/www.etoro.com\/en-us\/investing\/finding-the-right-etf\">next lesson<\/a> to discover how to find <a href=\"https:\/\/www.etoro.com\/discover\/markets\/etf\">the right ETF for you<\/a>.<\/p>\n\n\n\n<div class=\"wp-block-etoro-tip wp-block-etoro-tip-border-yellow\"><span class=\"wp-block-etoro-tip-icon\" style=\"background-image:url(https:\/\/www.etoro.com\/wp-content\/uploads\/2023\/09\/iShares_Small_Spec_Wordmark.png)\"><\/span><div class=\"wp-block-etoro-tip-text\">\n<p class=\"is-style-heading-4\"><strong>About iShares by BlackRock<\/strong><\/p>\n\n\n\n<p class=\"is-style-disclaimer\">iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 1300+ exchange traded funds (ETFs) and $3.12 trillion in assets under management as of September 30, 2023, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.<\/p>\n<\/div><\/div>\n\n\n\n\n\n<hr class=\"wp-block-separator wp-block-separator-color-dark-grey wp-block-separator-spaces-medium wp-block-separator-weight-1\"\/>\n\n\n\n<p class=\"is-style-disclaimer\">This communication is in collaboration with iShares by BlackRock. BlackRock and iShares are trademarks of BlackRock, Inc. or its affiliates (together \u201cBlackRock\u201d).&nbsp;BlackRock does not sponsor or endorse any content outside the ETF Academy and is not affiliated with eToro or any of its affiliates.&nbsp;<\/p>\n\n\n\n<p class=\"is-style-disclaimer\">This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient\u2019s investment objectives or financial situation. Any references to past or future performance of a financial instrument, index or packaged investment product are not, and should not be taken as, a reliable indicator of future results.&nbsp;<br><br><strong>eToro encourages its customers to carefully consider the funds\u2019 investment objectives, risks, and charges and expenses carefully before investing. This and other information can be found in the funds\u2019 prospectuses or, if available, the&nbsp; summary prospectuses which may be obtained by visiting each fund company&#8217;s website or <a href=\"https:\/\/www.sec.gov\/edgar\/search\" target=\"_blank\" rel=\"noreferrer noopener\">www.sec.gov\/edgar\/search<\/a>. For iShares Funds, please&nbsp;visit <a href=\"https:\/\/www.iShares.com\/prospectus\" target=\"_blank\" rel=\"noreferrer noopener\">www.iShares.com\/prospectus<\/a>. Read the prospectuses carefully before&nbsp;investing.<\/strong><\/p>\n\n\n\n<p class=\"is-style-disclaimer\"><strong>Investing involves risk, including possible loss of principal<\/strong>. Diversification and asset allocation may not protect against market risk or loss of principal. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Transactions in shares of ETFs may result in brokerage commissions and may generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.&nbsp;<br><br>Securities trading is offered by eToro USA Securities Inc., member of FINRA and&nbsp; SIPC, a self-directed broker-dealer that does not provide recommendations or investment advice. Visit our <a href=\"https:\/\/www.etoro.com\/en-us\/customer-service\/disclosures\/\" target=\"_blank\" rel=\"noreferrer noopener\">Disclosure Library<\/a> for additional important disclosures including our Customer Relationship Summary and order routing information and statistics. FINRA Brokercheck \u00a9 2023.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ETFs allow you to easily diversify your portfolio, providing access to different asset classes, such as stocks, bonds, commodities and real estate. There are many different types of ETFs available to invest in, including active and index ETFs, stock ETFs, bond ETFs, commodity ETFs, international ETFs, and thematic ETFs. Learn about the different types of&hellip;<\/p>\n","protected":false},"author":96,"featured_media":1138210,"parent":33237,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"inline_featured_image":false,"sticky_cta_settings":"","footnotes":""},"asset_type":[],"class_list":["post-712652","page","type-page","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<title>What types of ETFs are available?<\/title>\n<meta name=\"description\" content=\"Learn about the various types of ETFs available, including stock ETFs, bond ETFs, thematic ETFs, and sector ETFs.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.etoro.com\/en-us\/wp-json\/wp\/v2\/pages\/712652\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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