What is ETF? How to Buy ETF? 
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Just as different products can be found under one roof in a supermarket, ETFs (Exchange-Traded Funds) work on the same principle. They offer the opportunity to invest in a wide range of assets, from stocks to bonds, commodities to currencies, with a single transaction.
This diversity allows investors to easily diversify their portfolios, spread their risks, and gain access to different markets. Moreover, ETFs make the investment process very practical because they can be bought and sold during the day on stock exchanges, just like stocks. With their low costs, flexible trading options, and transparent structure, ETFs have become one of the fundamental tools of the modern investment world for both individual and institutional investors.
In this article, we will discuss what ETFs are, how they work, and the different types of ETFs!
What is an ETF?
Exchange-traded funds (ETFs) offer investors the flexibility of stocks and the diversified portfolio advantages of investment funds. This makes it possible to access different asset types with a single transaction.
As the name suggests, ETFs are funds traded on stock exchanges and are usually based on a specific index. Depending on the type of fund, the assets it contains may remain fixed or be updated according to market conditions, depending on whether it is actively or passively managed.
In short, ETFs can be defined as a “basket of securities traded on the stock exchange.” These funds offer investment opportunities across a wide range, from stocks to commodities, currencies to bonds. In this respect, they are a modern investment solution that facilitates access to both traditional and alternative investment instruments.
What Are Active Funds and Passive Funds?
Generally, ETFs are structured with passive management strategies; that is, they aim to track a specific index exactly. However, in the investment world, there are also ETFs that actively evaluate market opportunities. This difference causes funds to be divided into two categories based on their management style: “active” and “passive.”
In actively managed ETFs, the fund's portfolio is shaped by professional managers or an investment team. These managers aim to increase the fund's returns or outperform a specific benchmark index by making strategic decisions based on
market conditions. In this regard, stocks, bonds, or different securities are selected, and the portfolio is dynamically updated.
Passively managed funds, on the other hand, follow a more stable approach. The goal of these funds is to reflect the returns of a market index as closely as possible and to provide long-term returns with low transaction costs.
What Are the Different Types of ETFs?
ETFs (Exchange-Traded Funds) offer investors access to different asset classes with a single transaction. However, each ETF has different characteristics depending on the market or type of financial instrument it invests in. Therefore, there are many different types of ETFs that investors can choose from based on their goals and risk appetite. A brief overview of ETF types is as follows:
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Index ETFs
Index ETFs invest in the shares of companies included in a specific stock market index to reflect that index's performance. This allows investors to access a broad market segment without selecting individual stocks. These funds stand out for their low management fees and high liquidity.
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Sector ETFs
Sector ETFs focus solely on a specific industry or economic sector. This allows investors to concentrate on areas with high growth potential or diversify their portfolios by sector.
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Commodity ETFs
Commodity ETFs invest in physical assets such as gold, oil, silver, natural gas, or indices based on these assets. They are ideal for investors who want to benefit from price movements without dealing with the purchase of physical commodities. They also provide portfolio diversification and can be used as a hedge against inflation.
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Country and Region ETFs
Country and region ETFs provide investors with direct access to international markets by investing in companies from a specific country or region. They are an attractive alternative for investors seeking global diversification.
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Bond ETFs
Bond ETFs offer fixed returns and a low-risk profile by investing in government or corporate bonds. They are suitable for investors seeking stability in their portfolio and targeting regular income.
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Balanced ETFs
Balanced ETFs (balanced funds) are hybrid funds that balance risk and return by investing in both stocks and bonds. This structure offers opportunities for both growth and income over the long term.
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Leveraged and Inverse ETFs
Leveraged ETFs aim to multiply the daily returns of the index they track (e.g., 2x or 3x). Inverse ETFs move in the opposite direction, meaning they generate gains when the index falls. These types of funds are suitable for short-term strategies and involve high risk, making them preferred by experienced investors. They are suitable for short-term trading strategies and should be managed carefully as they can lead to unexpected losses in the long term.
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Cryptocurrency ETFs
Cryptocurrency ETFs are funds that track the price movements of digital assets. For example,
Bitcoin ETFs (BTC ETFs) allow investors to invest without providing direct access to the crypto market by tracking Bitcoin's market price. Similarly, alternative funds such as
XRP ETFs or
Solana ETFs track the performance of the relevant crypto assets. This allows investors to diversify their portfolios without directly owning digital assets.
How to Buy an ETF?
ETFs are investment instruments traded on stock exchanges, just like stocks. Therefore, to invest in an ETF, you must first open an account with a brokerage firm or investment platform. After opening an account, investors can select the ETF of their choice and execute buy-sell transactions.
The most important points investors should consider when investing in ETFs are criteria such as which index or asset the fund tracks, its management expense ratio, liquidity, and risk profile. These factors are decisive in terms of the investment's maturity and expected return.
ETFs offer investors the opportunity to create a diversified portfolio at low cost. The ease of daily buying and selling also allows for flexible action according to market conditions. ETF purchases can be made through CoinTR, which offers services in Türkiye.
How Does an ETF Work?
The operation of exchange-traded funds (ETFs) is actually quite simple. Fund providers create a portfolio containing various financial assets such as stocks, bonds, commodities, currencies, or Eurobonds. This portfolio is usually designed to track the performance of a specific index and is offered to investors as a “fund basket.”
Investors become partners in these funds by purchasing specific shares of ETFs; however, they do not directly own the assets held by the fund. Nevertheless, ETF investors can benefit from returns such as dividends (profit shares) or coupon payments, depending on the structure of the fund. One of the most notable features of ETFs is that they can be bought and sold throughout the day on stock exchanges, just like stocks. This allows investors to react instantly to market movements and manage their positions flexibly.
FAQ
What does ETF stand for?
ETF stands for Exchange Traded Commodity.
How can I buy foreign ETFs?
Users who want to invest in foreign ETFs can trade through brokerage firms that offer access to international markets.
What is ETF approval?
ETF approval means that the relevant regulatory authorities officially permit a stock exchange investment fund (ETF) to be offered to investors. This approval indicates that the fund's structure, operation, and legal requirements comply with established standards.
What is a gold ETF?
A gold ETF is an exchange-traded fund that tracks the price of gold and offers investors access to the gold market without the need to hold physical gold. These funds provide investors with an indirect gold investment opportunity by reflecting the value movements of gold.
2025-12-15Legal Notice
The information, comments, and evaluations contained in this content do not constitute investment advice. This content is not intended to be prescriptive in any way and is intended to provide general information. It does not constitute investment advice. CoinTR cannot be held responsible for any transactions made based on this information or any losses that may arise.
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