Types of ETVs

ETVs fall into three major types to fit diverse investment strategies and asset allocations:

  • Foreign Currency ETVs. Foreign Currency ETVs provide exposure to foreign currencies while avoiding complex transactions.  They are simple investment vehicles that track a foreign currency, the same way a market ETV tracks and underlying index.  They can also track a basket of currencies from different counties or regions.
  • Commodity ETVs. Commodity ETVs are like Sector/Industry ETVs in the sense that they are focused on a particular market.  However, when investors purchase a commodity ETV like oil or gold, they do not actually buy the commodity.  Instead, they buy derivative contacts in order to emulate the price of the underlying commodity.
  • Real Estate Investment Trust (REIT) ETVs. REIT ETFs are tradable index funds that hold REIT stocks. REITs offer exposure to real estate without the hassle of directly owning and managing property. They can also be used to hedge exposure to the real estate market.

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