Exchange - Traded Products (ETPs), How They Work, Its Inherent Risk and How They Differ From Mutual Funds
Exchange – Traded Product (ETP) Exchange- traded products (ETPs) are instruments that track underlying securities, an index, or other financial products. ETPs trade on the exchanges similar to stocks, meaning shares can be purchased, and prices can fluctuate through a trading day. ETPs share price are derived from the underlying investments that they track. Exchange-traded products can be benchmarked to myriad investment, including commodities, currencies, stock and bonds. ETPs may contain a few or hundreds of underlying investments. Here are the types of ETPs trading on the market. Exchange-Traded Fund (ETF) An exchange -traded fund (ETF) is a pooled investment security that can be bought and sold like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of securities. ETFs can be designed to track specific investment strategies. Various types of ETFs are available to investors for income gen...