While ETF's are still considered a relatively new investment vehicle, there are a few that have dominated the industry. By doing this they have commanded the attention of traders and thus are liquid products.
Today we will look at broad market ETF's and their uses for the retail investor.
A broad market ETF is one that covers a whole market such as the S&P 500. The goal of these ETF's is to replicate the performance of the S&P 500 all in one vehicle. This allows essentially a "one stop shop" for those that just want similar performance to the S&P 500 without the headache of buying 500 stocks.
The most popular ETF that tracks the S&P 500 is offered by a company called State Street Advisors and can be found under the ticker
The next ETF, as you may already be able to guess, tracks the Nasdaq 100. By far the most popular, and liquid ETF for the Nasdaq 100 is offered by a company called Invesco and is named the Power Shares QQQ Trust, which trades under the ticker
Lastly we have to look at the ever popular Dow 30. Everyone has seen on TV the reporters that say "The Dow Jones is up 70 points today", and then you look at the quote and its something around 17000. Now, no one actually pays $17000 for a share of the index, in fact you cant actually buy the Dow. So the company that brought you the SPDR's also came out with an ETF for the Dow, and guess what, they even have a catchy name for this one as well. The most popular ETF for trading the Dow 30 can be found under the ticker
Now there are certainly others that cover the less popular sectors like the Russell 2000. There are even more ETF's that track specific sectors like Gold, or Tech, which we will dig into deeper in further articles.