COMING SOON! (Course #47) Index Funds & ETFs 101: A Practical, Text-Based Course
A practical, text-based course that explains index funds and ETFs, covering how they work, major categories, and real-world examples.
Format: Self‑paced, text only
Level: Beginner → Intermediate
Estimated Time: 4–6 hours total
Disclaimer: Educational purposes only. Not financial advice.
Course Overview
This course introduces index funds and ETFs, explains how they work, and walks through major categories (broad market, sector, thematic, global). You’ll learn how to interpret holdings, weightings, country exposure, and performance drivers using real‑world examples.
What You’ll Learn
What index funds and ETFs are and how they differ
How expense ratios, diversification, and weighting work
Major ETF categories and representative tickers
How to analyze holdings and country exposure
How to reason about performance drivers (without stock picking)
Module 1 — Foundations: What Are Index Funds & ETFs?
Objective: Understand the basic concepts and terminology.
Lesson 1.1 — Index Funds Explained
An index fund tracks a predefined index (e.g., S&P 500)
Provides diversified exposure across many companies
Reduces single‑stock risk compared to owning one company
Lesson 1.2 — ETFs vs Mutual Funds
ETFs: Trade intraday like stocks
Mutual Funds: Priced once per day after market close
Both can track the same index (different wrappers)
Lesson 1.3 — Expense Ratios
Ongoing fee charged by the fund provider
Lower ratios matter over long time horizons
Fees compensate for index maintenance and operations
Quick Check
Why do index funds charge an expense ratio?
What is one key trading difference between ETFs and mutual funds?
Module 2 — Broad Market & Core Indexes
Objective: Learn the most common “core” funds used by investors.
Lesson 2.1 — S&P 500 Trackers
SPY — Tracks the S&P 500
VOO — Similar exposure with lower expense ratio
Focus on large‑cap U.S. companies
Lesson 2.2 — Total Market Funds
VTI — Total U.S. stock market (large → micro cap)
VTSAX — Mutual fund version of VTI
Broader diversification than S&P 500
Lesson 2.3 — Growth & Small‑Cap Indexes
QQQ — Nasdaq‑100, tech & growth heavy
IWM — Russell 2000, small‑cap U.S. companies
Key Concept: Weighting
Top holdings can represent ~30%+ of an index
Performance often driven by a small set of large companies
Exercise
Compare SPY and QQQ conceptually:
Which is more tech‑heavy?
Which is more diversified by sector?
Module 3 — Sector ETFs
Objective: Understand ETFs focused on specific industries.
Lesson 3.1 — Technology
XLK — Broad U.S. technology
IGV — Software companies
Heavily weighted toward large tech firms
Lesson 3.2 — Semiconductors
SMH, SOXX, SOXQ
Includes chip designers, manufacturers, and equipment makers
Global exposure (U.S., Taiwan, Europe)
Lesson 3.3 — Energy, Healthcare, Financials
XLE, VDE, FENY — Energy
XLV, VHT — Healthcare
FNCL, VFAIX — Financial services
Key Insight
Sector ETFs can outperform or underperform the market depending on macro trends (rates, technology cycles, regulation).
Module 4 — Global & China‑Focused ETFs
Objective: Learn about geographic diversification and its risks.
Lesson 4.1 — China ETFs
FXI — Large‑cap China
MCHI — Broad China exposure
KWEB — China internet & e‑commerce
ASHR — Mainland China A‑shares
Lesson 4.2 — Country Exposure Matters
Political, regulatory, and currency risk
Concentration risk even within a “country ETF”
Reflection
Why might global diversification reduce risk but also add complexity?
Module 5 — Thematic & Industry ETFs
Objective: Explore specialized investment themes.
Lesson 5.1 — Clean Energy & Innovation
ICLN — Renewable energy
IGPT — AI & technology innovation
Lesson 5.2 — Consumer & Travel Themes
PBJ — Food & beverage
JETS — Airlines
CARS — Global auto industry
Key Insight
Thematic ETFs can be volatile and trend‑driven; timing and patience matter.
Module 6 — Real Estate ETFs
Objective: Understand REIT‑based investing.
Lesson 6.1 — REIT Basics
REIT = Real Estate Investment Trust
Income‑focused, asset‑heavy businesses
Lesson 6.2 — Major Real Estate ETFs
VNQ — U.S. real estate
VGSLX — Mutual fund version
REET — Global real estate
Discussion
How do data centers blur the line between technology and real estate?
Module 7 — How to Analyze an ETF (Framework)
Objective: Build a repeatable analysis checklist.
ETF Analysis Checklist
Index tracked
Top 10 holdings & weights
Sector & country exposure
Expense ratio
Historical performance context
Volatility & concentration risk
Capstone Exercise
Pick one ETF and write a one‑page analysis using the checklist above.
Final Assessment
Answer briefly:
Why can two ETFs tracking similar sectors perform differently?
How do country exposure and weighting affect risk?
When might a broad market ETF be preferable to a sector ETF?
Course Completion
You now have a structured, practical understanding of index funds and ETFs—and a framework to evaluate new ones confidently.
Next Steps (Optional):
Compare performance across market cycles
Simulate a diversified portfolio using multiple ETF categories
Explore how APIs and data tools can automate ETF analysis