Top ETFs for New Traders


So by now, we understand that ETFs closely mirror an index. This index is a basket of stocks that are selected to mirror the performance of the index. There are many indexes that are tracked by ETFs, and stock indexes are by far the most commonly used. Because of equity ETFs’ liquidity and low commission rates, day traders have also taken a preference to trading them. Below we will list some of the top ETFs and the most commonly traded.


what is an etf fund


With all that said, here are some of the ETFs that are most commonly traded:


1. SPDR S&P 500 (NYSE:SPY)


As the name suggests, SPDR tracks the S&P 500 Index. S&P, or Standard and Poor 500 index is based on the market capitalization of 500 large companies across the entire market spectrum. Because of its large sample size and extensive industries covered S&P 500 is considered to be one of the most accurate reflections of the economy. SPDR was launched by State Street Global Advisors in 1993 and has since risen to be the world’s largest ETF, with net assets totaling over $170 billion.


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This fund tracks the Dow Jones Industrial Average, DJIA. The Dow Jones Index consists of 30 of the largest companies in the respective industries and is one of the most watched benchmarks in the world. The companies that make up this index are what investors call “blue-chip” stocks. Blue chip companies are very well-established and market leaders.


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3. SPDR Gold Shares (NYSE:GLD)


SPDR Gold fund tracks the spot price of the gold bullion. Each share represents a one tenth of an ounce ownership in gold. Buying shares of GLD will replicate the same price movement made by gold. The average value of assets under GLD is $35 billion.


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4. iShares Russell 2000 (NYSE:IWM)


Launched in May 2000, Russell 2000 Index ETF tracks the Russell 2000. This index lists 2000 Small-cap stocks that have potentially large growth in the next few years. However, investments in these companies also come with a larger degree of risk. To date, IWM is the second largest ETF in terms of liquidity and volume traded.


Note: SPDR – Standard & Poor’s Depositary Receipts. These family of ETFs are managed by State Street Global Advisors. There are various other families of ETFs that are managed by other companies such as iShares and VIPERs.


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Now that we are done going through the top etfs, we can move on to the topic of why exactly you should be buying ETFs.


What Is An ETF

Why Trade ETFs

Should I Trade ETFs?

Buying and Selling ETFs

Choosing a Good ETF

Passive or Active Investing

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