What is Exchange-Traded Fund?

An ETF is a basket of securities—such as stocks, bonds, or commodities—that trades on a major stock exchange (like the NYSE or Nasdaq) throughout the trading day, just like an individual company's stock. Most ETFs are designed to track the performance of a specific index, like the S&P 500 or the FTSE 100. This provides investors with a simple, low-cost way to gain exposure to an entire market segment.

Because they are traded on exchanges, ETF prices fluctuate intraday based on supply and demand. They typically have lower expense ratios than many mutual funds and offer high liquidity and transparency regarding their holdings. ETFs are popular tools for both long-term investing and shorter-term tactical moves.