Exchange-Traded Funds

An investment company whose objective is to match the performance of a particular index - in this case, an international one - is called an exchange-traded fund (ETF). ETFs are a hybrid of individual securities and mutual funds. Just like stocks, ETFs are listed and trade on the exchanges. You may also use the same trading orders - like market, stop and limit - that you do with stocks. However, like mutual funds, you are buying shares of a fund, which in turn invests in a portfolio of securities.

You can decide to track the index of a particular country, region, or even the world through an ETF. For example, an ETF might attempt to duplicate the performance of an index that tracks select companies in Germany, those throughout Europe, or companies located around the world.

Before investing in an ETF, carefully consider the investment objectives, risk, charges, and expenses. A prospectus contains this and other information about the mutual fund and is available through or through a Scottrade branch office. The prospectus should be read carefully before investing.

As with any investment, the costs and risks associated with ETFs vary depending on the type of fund in which you're invested.

Investors should consider the investment objectives, risks, charges, and expenses of an Exchange Traded Fund (ETF) carefully before investing. A prospectus contains this and other information about the ETF and can be obtained from the issuer. The prospectus should be read carefully before investing.

The information and content provided in the Scottrade® Knowledge Center is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.