A Beginner's Guide to Exchange-Traded Funds (ETFs) This ebook will tell you all you need to know about ETF. An Exchange-Traded Fund (ETF) is a type of investment vehicle that allows investors to trade stocks, bonds, and commodities in one transaction. Investors benefit from ETFs because they are low cost, diversify, are tax efficient, transparent, and liquid. Among the different types of ETFs available are index ETFs, sector ETFs, bond ETFs, commodity ETFs, and actively managed ETFs. In terms of investment objectives and characteristics, each type of ETF is unique. Just as with individual stocks, investors can buy and sell ETFs through a brokerage account. A daily disclosure of an ETF's holdings is required by the Securities and Exchange Commission (SEC). In addition to market risks, liquidity risks, and concentration risks, ETFs also carry other risks. These risks should be carefully considered and assessed by investors before investing in ETFs.