Ferrofluids are composed of nanoscale particles (diameter usually 10 nanometers or less) of magnetite, hematite or some other compound containing iron.
This is small enough for thermal agitation to disperse them evenly
within a carrier fluid, and for them to contribute to the overall
magnetic response of the fluid. This is analogous to the way that the
ions in an aqueous paramagnetic salt solution (such as an aqueous solution of copper(II) sulfate or manganese(II) chloride) make the solution paramagnetic. The composition of a typical ferrofluid is about 5% magnetic solids, 10% surfactant and 85% carrier, by volume.