How often do ETF holdings change?

Although exchange-traded funds (ETFs) were initially designed to have low portfolio turnover (compared with actively managed mutual funds), higher portfolio turnover is becoming more common as newer ETFs attempt to mimic active management strategies.

ETFs typically change (reconstitute or rebalance) their holdings when their underlying index changes, which in most cases is quarterly or less often.

However, some newer and more specialized indexes rebalance monthly. And since ETF managers are not required to hold every single stock in a given index (some simply hold a subset designed to track the index's performance), they have discretion to reconstitute the fund's holdings as long as the current holdings are known to the market at all times.

To find out how often an ETF's holdings are reconstituted or rebalanced, read the prospectus or consult the ETF sponsor's website (links).