HOLDRs, or Holding Company Depositary Receipts, are one of the most popularly traded exchange traded funds (ETFs) on the American Stock Exchange on any given day.

However, the HOLDRs are not technically ETFs. They simply resemble them. Instead, HOLDRs are grantor trusts, which are treated and managed differently. We recently explained some of the differences between ETFs and HOLDRs, and ETF Guide gives a little more insight.

Instead of an expense ratio, they charge a small custody fee that depends on the number of shares owned. They can only be purchased in 100-share increments or round lots.

Each HOLDR is a predefined collection of stocks representing a particular sector. Unlike ETFS, when a single stock disappears from the HOLDR, the trust is not rebalanced and the stock is not replaced. This was recently seen when BEA Systems Inc. (BEAS) was acquired by Oracle Corp. (ORCL) in April. BEA was the second-largest component of the Internet Infrastructure HOLDRs (IIH).

The remaining stocks tend to become concentrated and create volatility.