Equity ETFs invest in a basket of company stocks (also known as equities or shares). They are the most common type of ETFs. Equity ETFs enable you to own part of hundreds or even thousands of companies in a single trade. These ETFs are often designated as passive or active investments:

• Passive ETFs: their objective is to track a designated index, to the greatest extent possible.
• Active ETFs have a portfolio manager or team working to beat a given index by investing in a different way through portfolio allocation versus a benchmark.

Stocks can be categorized in many different ways, providing a huge choice of equity ETFs.

4 Examples of Equity ETFs:

• Broad Market Passive Equity ETFs: ETFs that track a popular broad equity market index such as the S&P 500 Index.
• Emerging Market Equity ETFs: ETFs that invest in stocks from emerging market countries.
• Healthcare ETFs: ETFs that invest in stocks of companies in the Healthcare sector.
• Small Cap ETFs: ETFs that invest in stocks of small sized companies.

In reality, there are many more types of Equity ETFs than we can list here, but they all do the same thing. They allow you to buy shares companies adhering to a stated investment objective or thesis.

This article was written in collaboration with Trackinsight.