ETFs EXPLAINED

Exchange Traded Funds (ETFs) are an easy-to-use, low cost way to invest your money. An ETF can provide you with access to a diversified portfolio of stocks or bonds in a single investment that trades just like a stock.

Comparing ETFs and mutual funds

Many investors are familiar with mutual funds. How are ETFs similar? And what makes them different?

Chart: Comparison ETFS and Mutual Funds
Number 1

Diversification

You get a diversified collection of stocks and/or bonds, which can potentially help reduce risk compared to individual securities.

Number 2

Risk and reward

The risk profile of an ETF is derived from its underlying holdings, as with mutual funds.

Number 3

Professional management

The funds are overseen by professional managers.

Number 4

Fund performance

Most ETFs seek to closely match the performance of an established stock or bond index, such as the S&P 500 or the TSX. Actively managed mutual funds try to beat the index, which can be hard to do, especially after fees and taxes.

Number 5

Buying and selling

As with stocks, you can buy and sell ETFs at the market price whenever the market is open. Mutual fund shares are purchased directly from the fund at Net Asset Value and priced once a day after the market closes.

Number 6

Knowing what you own

Because ETFs usually aim to track an index, their holdings change relatively little over time – without the “style drift” that may surprise mutual fund investors.

WHAT ARE THE BENEFITS OF iSHARES ETFs?

Icon: Magnify Glass

Transparent

ETFs are traded on stock exchanges, which allows for price transparency throughout the day, so you always know what your investment is worth.

Icon: Low cost tag

Low Cost

iShares ETFs are low cost, averaging 0.25% in annual management fee1. The savings an investor can achieve from lower fess can be significant over time.

Icon: Diversify

Diversify

iShares ETFs make it easy to invest in a wide array of markets, from broad equity and bond markets, to niche sectors. The underlying holdings are disclosed daily, so that you always know what you own.

DISCOVER OUR PRODUCTS

Explore our 140+ offerings to find ETFs that fit your investment strategy.