What Is ETF (Exchange-Traded Fund)? Meaning & Example
Definition
An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
Related terms
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
Mutual FundA mutual fund pools money from many investors to buy a portfolio of securities, managed by professionals. Shares are bought and sold at the end-of-day price.
Expense RatioThe expense ratio is the annual fee a fund charges, shown as a percentage of the money invested. Lower expense ratios leave more of the returns for investors.
What is ETF (Exchange-Traded Fund)?
An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
Can you give an example of ETF (Exchange-Traded Fund)?
Buying one share of a broad market ETF gives you exposure to hundreds of companies at once.