Getting started with ETFs
E*TRADE Securities, in collaboration with iShares by BlackRock.08/25/21
You probably already know that an exchange-traded fund, or ETF, is a basket of many different investments that can be bought and sold during market hours, like a stock. ETFs can offer diversified, low-cost, and transparent access to the world’s investment markets, which makes them a good way to start investing or to supplement your existing investments. Here’s what you need to know to get started with ETFs.
A diversified foundation for the long-term
One of the first things nearly all new investors think about is building a diversified portfolio of investments as the core, or foundation, of a long-term investing program. For many people, ETFs may be a good way to do this.
Many ETFs are built to match the performance of broad markets, including the US stock market, international stock markets, bond markets, and more. This means that by investing in just a few ETFs, you may be able to achieve a well-diversified mix of investments, with a balance between growth potential and risk that fits your long-term goals and strategy.
More focused investing
With a strong long-term foundation in place, some investors may want to pursue more narrow investment ideas. Maybe it’s a potential opportunity they spot from watching the news or the markets, or perhaps it’s an industry or sector where they have deep knowledge or interest.
ETFs offer options here, too, using a strategy known as thematic investing. This approach uses ETFs whose focus is on specific ideas or segments of the market, which are known as investing “themes”. Some examples of themes include:
- Industry sectors like healthcare, technology, energy, and a host of others
- Specific countries or regions such as Europe, China, or emerging markets
- Commodities like gold or oil
- Trends or values-based ideas like sustainable investing, remote work, or healthy living
- Income-oriented investments such as companies that pay high dividends, or bonds
- Stock investing strategies like Momentum, Growth, or Value
- Future technologies like driverless cars, robotics, artificial intelligence, and genomics and immunology
Ultimately, there’s a huge range of possible themes, and many of them have one or more corresponding ETFs. If you spot a trend or think a particular technology or business is likely to take off, it’s definitely worth checking to see if there’s a thematic ETF focused on your idea.
Covering your bases
With so many ETFs available, it’s important to do your homework before buying. Things to check include what’s known as an ETF’s exposure, or what investments it actually owns. Also check the ETF provider—is it a reputable ETF brand? And, of course, you’ll want to investigate the costs, including the fund’s expense ratio and its tax efficiency. The E*TRADE from Morgan Stanley ETF screener and the fund’s prospectus can provide a wealth of information related to these and other due diligence questions.
If you find answers that work for your goals and investing strategy, then it’s just a matter of placing your order. After years of development and expansion, ETFs are now important tools for millions of investors, helping them access many different markets and pursue a variety of investing objectives.
iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 900+ exchange traded funds (ETFs), iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.
How can E*TRADE help?
Select your risk tolerance and easily invest in diversified, professionally selected portfolios of mutual funds or exchange-traded funds (ETFs). And you pay no trading commissions although fund fees and expenses still apply.
Get started with as little as $500 (mutual funds) or $2,500 (ETFs).
Find ETFs that align with your values or with social, economic, and technology trends.
With Core Portfolios, we'll build, manage, and rebalance a diversified ETF portfolio for you. And we can help you invest in socially responsible companies too.
Choose from a list of exchange-traded funds, selected by Morgan Stanley Smith Barney, LLC.