Etf Definition
Etf Definition
Confused about ETF terms?
I am trying to lean about ETFs and I keep coming across certain terms but I can’t find definitions for them. What are :
1. Short ETFs
2. Inverse ETFs
3. High Yield ETFs
Are they always the same, or can they fall into different categories at different points in time?
Here is a good reference for finance terms and definitions:
http://www.investopedia.com/terms/i/inverse-etf.asp
What Does Inverse ETF Mean?
An exchange-traded fund (ETF) that is constructed by using various derivatives for the purpose of profiting from a decline in the value of an underlying benchmark. Investing in these ETFs is similar to holding various short positions, or using a combination of advanced investment strategies to profit from falling prices.
Also known as a “Short ETF,” or “Bear ETF”.
Investopedia explains Inverse ETF
One advantage is that these ETFs do not require the investor to hold a margin account as would be the case for investors looking to enter into short positions.
There are several inverse ETFs that can be used to profit from declines in broad market indexes, such as the Russell 2000 or the Nasdaq 100. In addition, it is possible to buy inverse ETFs that focus on a specific sector, such as financials, energy or consumer staples. Most investors look to purchase inverse ETFs so that they can hedge their portfolios against falling prices.
What Does Short (or Short Position) Mean?
1. The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.
2. In the context of options, it is the sale (also known as “writing”) of an options contract.
Opposite of “long (or long position)”.
When you say “high yield” you’re generally talking about bonds. Maybe you mean high leverage or high return.
What Does Ultra ETF Mean?
A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark. The first ultra ETFs were launched in 2006 and the class has grown to include different ETFs with underlying benchmarks ranging from broad market indexes, such as the S&P 500 and Russell 2000, to specific sectors, such as technology, healthcare and basic materials.
Understanding the ETF Definition in Simple Terms
