InvestorQ : Can anyone explain the free Exchange-traded fund(ETF) trading?
Sneha Balasubramanian made post

Can anyone explain the free Exchange-traded fund(ETF) trading?

Gauravi Patel answered.
11 months ago
An exchange-traded fund is a basket of many securities such as stocks, which often track an underlying index. ETFs are similar to mutual funds and are traded on a stock exchange throughout the year. ETFs can contain many investments including commodities, bonds, stocks, or a mixture of investment types. The price of ETFs fluctuates every day throughout the year just like stocks. They are generally cost-effective and are more liquid as compared to mutual funds.

Though ETFs have lower expense ratios and fewer broker commissions, there are ETFs that come with no broker commissions, and these ETFs are known as commission-free exchange-traded funds. These are ETFs that do not have any associated trading costs with them.

Commission on ETFs is generally charged every time you trade on these shares. Therefore, if you buy and sell ETFs frequently, it could get really expensive. But if one buys ETFs with no commission they can save a lot of cost per year on trading, that too if one does trading on a monthly basis.

Typically, these funds are offered by almost every fund house as free ETFs are their own proprietary funds and it is easy for them to offer it at no cost. This simply means you have to be extra-cautious and do your research while buying these ETFs since they may not be as advantageous as you expect them to be.