WHAT IS AN ETF?

Exchange traded funds (ETFs) offer diversified, low-cost and tax-efficient access to the world’s investment markets. ETFs are designed to track the performance of specified indexes, less fees.

WHAT ARE THE BENEFITS OF ETFs?

iShares Core ETFs have outperformed 76% of their peers on average over the past five years1
ETFs are 1/10 the price of the average active mutual fund 2
5.6% of iShares ETFs on average paid capital gains distributions over the last 5 years vs. 54% of mutual funds3

Comparing ETFs and mutual funds

Many investors are familiar with mutual funds. How are ETFs similar?
And what makes them different?

Click the icons to learn more.

Comparing ETFs and mutual funds
Diversification Professional management Risk and reward Cost Fund performance Buying and selling Knowing what you own

  • Similarities

    Diversification
    Diversification
    You get a diversified collection of stocks and/or bonds, which can potentially help reduce risk compared to individual securities.
    Professionally managed
    Professionally managed
    The funds are overseen by professional managers.
    Risk and reward
    Risk and reward
    The risk profile of an ETF is derived from its underlying holdings, as with mutual funds.

  • Differences

    Cost
    Cost
    ETFs typically cost less than comparable mutual funds (⅓ the cost, on average), and there are no hidden loads or fees. (Your broker may charge a transaction fee, though many iShares ETFs are available commission-free at providers like Fidelity⁴). What’s more, your taxes may be significantly lower: tax costs for iShares ETFs on average are less than ½ those of the average mutual fund³.
    Fund performance
    Fund performance
    Most ETFs seek to closely match the performance of an established stock or bond index, such as the S&P 500 or the Bloomberg Barclays U.S. Aggregate Bond Index. Actively managed mutual funds try to beat the index, which can be hard to do, especially after fees and taxes. iShares Core ETFs have outperformed more than 75% of their mutual fund peers on average over the past 10 years¹.
    Buying and selling
    Buying and selling
    As with stocks, you can buy and sell ETFs at the market price whenever the market is open. Mutual fund shares are purchased directly from the fund at Net Asset Value (NAV) and priced once a day after the market closes.
    Knowing what you own
    Knowing what you own
    Because ETFs usually aim to track an index, their holdings change relatively little over time – without the “style drift” that may surprise mutual fund investors.

Learn more about the differences in investment strategy, fees, and tax implications of ETFs vs mutual funds.

HOW TO USE ETFs

Everyone’s investment goals are unique. What outcomes are you targeting?
Build a stronger portfolio foundation with iShares Core ETFs
Build a stronger core
iShares Core ETFs are diversified, low-cost funds designed to help build a strong foundation for your portfolio.
Build Build
Seek to help generate income with ETFs
Seek income
ETFs can help generate income through bonds, dividend-paying stocks, and preferred stocks.
Seek Seek
Prepare for market turbulence and help reduce risks with ETFs
Prepare for market turbulence
Minimum volatility ETFs are designed to help reduce risk and keep you invested.
Prepare Prepare
Invest internationally with ETFs
Invest internationally
iShares ETFs offer access to virtually all non-US investable markets, from broad exposures to single countries.
Invest internationally Invest internationally
Act on opportunities with diversification of ETFs
Act on opportunities
ETFs offer the same trading flexibility as stocks, with added diversification.
Explore Explore

BY THE NUMBERS

1993 The first ETF was introduced in 1993

1997 iShares has been a leading ETF provider since 1997

4T ETFs are now a $4 trillion industry

300+ iShares provides the widest array of ETFs, with 300+ offering