ETF classification: Categories, Focuses, and Niches

The classification of ETFs (Exchange-Traded Funds) is a way to organize these funds based on various characteristics. Typically, the classification occurs on several levels: asset class, category, focus, and niche. Let's look at each of these in more detail:

Asset class: This is the most general level that determines the type of investments the fund trades in. Examples of asset classes include equities (stocks), bonds, real estate, and commodities.

Category: At this level, funds are divided into subgroups within their asset class. For example, within the "equities" asset class, categories might include sectors (technology, healthcare, etc.), company size (large, medium, small), and style (growth, value).

Focus: This level considers more specialized characteristics. If, for example, an ETF invests in technology stocks, its focus could be on specific sub-sectors like AI or cybersecurity.

Niche: This is the most specific level of classification. Funds in this category usually focus on very narrow and specialized market segments. For example, an ETF may invest only in companies involved in developing electric vehicles.