Exchange-traded funds, known as ETFs, are bundles of individual investments that can include stocks, bonds and other assets. ETFs vary in both size and cost, leaving investors with plenty of options when searching for the right addition to their portfolio. Thousands of ETFs are currently on the market, each associated with a defined brand. Behind every brand stands a governing entity referred to as the issuer.
“The main difference between the brand and the issuer of an ETF is that a brand is a unique product identifier, and issuers are those responsible for the management of the security,” says John Jones, an investment advisor representative at Heritage Financial. “Think of it as the company PepsiCo owns the brands Lay’s, Pepsi (and) Gatorade.”
The issuer of an ETF is responsible for creating, administering and marketing the fund. In recent years, issuers have been changing the composition of ETFs.
“(We) have seen a big shift in the last few years in the size of ETFs that come to market,” with more smaller-sized ETFs coming to market than last year, says Stash Graham, managing director at Graham Capital Wealth Management. “These ETFs tend to be more active and niche-focused than the older, passive index-mimicking funds.”
Though the size of individual ETFs may be shrinking, the biggest brands show no signs of slowing down, which can be a boon for investors.
More popular or notable ETFs have more volume, “which provides more liquidity for the investor,” Jones says.
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