CHAPTER 2

Major Types and Families of ETFs

The most popular and well-known exchange-traded funds (ETFs) are those that track the major stock market indexes such as the S&P 500, the Dow, and the Nasdaq 100 Index. Other broad-based ETFs mirror more specific indexes such as the small-cap Russell 2000 and the S&P MidCap 400.

Within the arena of broad-based ETFs, there are also more specialized “market segment” ETFs that break down the main stock market indexes according to focus: growth, value, or dividend. When the entire stock market is overly bullish, there may not be much of an advantage to trading in the market segment ETFs. Nevertheless, during periods of range-bound trading, when most of the main indexes are stagnant, you will often find ...

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