What types of ETFs are there?

 

Index-based ETFs

While there are more than 1,915 ETFs available today, more than 99% of the assets are invested in traditional index-based ETFs.* Index-based ETFs are available in nearly every style and asset class, covering virtually every segment of the domestic and global equity and fixed income markets. They range from products that invest in the widest coverage of the markets, to those that invest in specific industries.

There are style ETFs that cover the growth and value spectrum and those that track certain market capitalizations. International ETFs cover the global markets and offer exposure to a single country or region of the world. And, finally, there are bond ETFs that cover a variety of duration, credit quality, and maturity ranges.

*Source: Vanguard and Bloomberg, as of December 31, 2017.

Here are some examples of various types of Vanguard ETFs®:

There are style ETFs that cover the growth and value spectrum and those that track certain market capitalizations. International ETFs cover the global markets and offer exposure to a single country or region of the world. And, finally, there are bond ETFs that cover a variety of duration, credit quality, and maturity ranges.

*Source: Investment Company Institute, as of May 31, 2013.

Here are some examples of various types of Vanguard ETFs®:

 

Other types of ETFs

Actively managed ETFs

These types of ETFs are managed to meet a particular investment objective. The portfolio manager actively manages the assets within the ETF to achieve that objective. Actively managed ETFs represent only a small portion of the overall industry.

Commodity and currency ETFs

These ETFs invest in the commodities and currency markets through either physical assets or through the futures markets, allowing investors to gain exposure to alternative investments such as agricultural products, precious metals, energy, and currencies. These ETFs are primarily non-1940 Act–regulated investment vehicles.

Leveraged ETFs

These are ETFs that use financial derivatives and debt to improve upon the returns of an underlying index. Leveraged ETFs attempt to produce twice or even three times the daily return of their underlying benchmark. This means that losses will also be amplified by two or three times the benchmark return.

Learn more about leveraged ETFs

Inverse ETFs

These ETFs use derivatives to profit from a decline in the value of an underlying asset or instrument. These ETFs are designed to move in the opposite direction from the market they are trying to mirror. Investing in inverse ETFs is popular for short-term traders looking to hedge longer investments or take advantage of falling markets.

Please note that leveraged and inverse ETFs typically are designed to track a multiple of, or the inverse of, a daily return of the index. These ETFs are not designed to sustain this same multiple or inverse of index return over longer time periods.

All investing is subject to risk, including possible loss of principal.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

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