Exchange-Traded Fund (ETF) Definition - Glossary

An ETF is a financial instrument that tracks assets and trades on stock exchanges like a regular stock.

An Exchange-Traded Fund (ETF) is an investment fund that holds a collection of assets such as stocks, bonds, or commodities. It is traded on stock exchanges, similar to individual stocks. ETFs offer investors a way to diversify their portfolios without owning the underlying assets directly. They can track specific indexes, sectors, or investment strategies. The price of an ETF fluctuates throughout the trading day as shares are bought and sold. ETFs are popular for their liquidity, transparency, and cost-effectiveness compared to mutual funds. They provide an accessible way for both individual and institutional investors to participate in various markets.