Whatisetf.com

These ETF’s are highly correlated with money market funds, which are derivatives of the short-term cash generated by companies when investors purchase instruments such as commercial paper or CD’s. Because these instruments are typically seen as safe investments, ETF’s correlating to them are also generally seen as having stability. Instead of having to project years out, as investors may have to do with long term high yield bonds, an investor only needs to consider what the next year or so will look like for the economy. This is because many of the instruments bought at the time of investing in the ETF will have been “refreshed” after one year – the performance of one year isn’t likely to directly impact the following. Instead, movements in the overall short-term economy typically influence the prices of these ETF’s.