The Basics of Exchange-Traded Funds

Exchange-Traded Funds pic
Exchange-Traded Funds
Image: investopedia.com

Named one of the Financial Times’ top 300 advisory firms in 2016, Sheaff Brock is an Indianapolis firm that oversees more than $1 billion in assets on behalf of its clients. In its work with high net worth individuals, Sheaff Brock’s sister company, Salzinger Sheaff Brock, uses several portfolio options, including the purchase of exchange-traded funds (ETFs).

A type of fund that owns some form of underlying asset, such as equity shares, gold bullion, or oil futures, which it divides into shares, an ETF offers indirect ownership of its assets to shareholders. Investors in an ETF receive a proportion of the profits generated by the assets in relation to their share ownership, usually in the form of dividends or earned interest, and may also receive a residual value following the liquidation of the ETF.

Considered a passive investment that is not traditionally overseen by a fund manager, ETFs differ from traditional active funds as they receive continuous pricing throughout the course of a day, allowing investors and traders to profit from short-term market movements.