Investing in an ETF can be profitable, just as any such investment can be. You can also see a big loss, just as with any other investment. Anything you purchase that relies on the stock market to show a profit is a gamble in one form or another, though some things like ETFs are less a gamble than other securities.
An ETF is an Exchange Traded Fund. That means it's traded in the exchange just like common stock, and it's a fund instead of one individual stock. There are important distinctions both from common stock and mutual funds.
Mutual funds aren't traded throughout the day like stocks. They're valued at the end of each day. The similarity between mutual funds and ETFs is the way the investments are spread out among many different companies in an index. Mutual funds might include investments in pharmaceuticals, airlines, copper, gold, coffee, the movement of a particular index like S&P or Dow, and any number of investments. An ETF will be in one particular index. All of the companies will be in one industrial sector or the fund will follow a specific commodity. This lets you invest in one sector, but spread your money over several companies.
Stocks are similar to ETFs because they're exchange traded, but a stock is in one company, not spread around like a fund. So when you purchase into one of the
airline ETFs, you get the ability to trade those shares like stock without having to bet on just one company. It's like marrying the convenience of stocks with the wider investment of a mutual fund, and incurring less ongoing cost than mutual funds carry.
An
airline ETF then is an umbrella fund representing many airlines and following the general trend of a sector. Many experts say there's nowhere to go but up because airlines have suffered over the last several years. By choosing an ETF, you're not at the whim of just one company's profits or losses.
