The basics
ETF stands for exchange-traded fund. It is a fund that holds a collection of securities — such as stocks or bonds — and trades on a stock exchange during market hours.
When you buy one ETF, you get exposure to everything inside that fund. For example, a TOPIX ETF holds many Japanese stocks that make up the TOPIX index, so buying one ETF gives you broad Japan stock exposure without picking individual companies.
How an ETF tracks an index
Most ETFs are designed to follow a benchmark index. The ETF buys the same securities as the index, or a representative sample, and tries to match the index return minus a small annual fee called the trust fee.
For example, a Nikkei 225 ETF aims to move with the Nikkei 225 index, which tracks 225 major Japanese companies. You can browse TOPIX ETFs and Nikkei 225 ETFs on ETF Note, or read the TOPIX vs Nikkei 225 guide to understand the difference.
Why people use ETFs
ETFs make it simple to get broad market exposure in one trade. Instead of buying dozens of individual stocks, you buy one ETF that holds them all. The cost is usually low because the fund passively follows an index rather than having a manager actively pick stocks.
ETFs also cover many asset types. On the Tokyo Stock Exchange, you can find ETFs that track Japanese equities, overseas stocks, bonds, gold, real estate, and more. You can explore the full range by browsing by theme or browsing by issuer.
Types of ETFs to know
Most ETFs are straightforward index funds. But some are designed differently. Leveraged ETFs target a multiple of the daily index move, and inverse ETFs target the opposite daily move. These carry more risk and are not suitable for most investors as long-term holdings. Read the leveraged and inverse ETFs guide before considering them.
There are also REIT ETFs that invest in real-estate trusts, and foreign-asset ETFs that may be hedged or unhedged for currency risk. The REIT ETF guide and hedged vs unhedged guide cover those in more detail.
Finding ETFs on ETF Note
ETF Note lists all ETFs on the Tokyo Stock Exchange. The home page shows a full listing where you can compare the benchmark, issuer, trust fee, and listing date side by side.
If you are looking for low-cost options, the lowest-fee ETFs page filters the list by fee. If you want to see what has been listed recently, check the newest ETFs page.