Exchange traded funds have gained the favor of investors because of their low expense ratios, tax efficiency, diversification, trading flexibility and liquidity. They offer a lower relative cost alternative to other vehicles such as stocks and many mutual funds.
Where are ETFs traded?
ETFs trade on major U.S. and foreign stock exchanges and can be bought/sold via a brokerage account. In the United States, the American Stock Exchange (Amex), New York Stock Exchange (NYSE), and the NASDAQ list most exchange-traded funds.
What are the associated risks?
Equity-based exchange traded funds have a similar risk profile to those of equity mutual funds, while fixed income-based ETFs have a risk profile that approximates bond mutual funds. Performance returns will fluctuate and are subject to market conditions and interest rate changes. ETF shares may be valued more or valued less than their original cost at the time of sale or redemption. ETFs that invest in foreign securities have higher risk characteristics versus domestic securities. Past performance is no guarantee of future results
Do ETFs come with a prospectus?
Yes. Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-515-2157. Please read the prospectus carefully before investing.