#ETFWatch TRADE

TABLE OF CONTENTS

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By 

JAMES CHEN

Updated August 01, 2024

Reviewed by 

GORDON SCOTT

Fact checked by JIWON MA

Part of the Series

Exchange-Traded Fund Guide for Beginners

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DEFINITION

An exchange-traded fund is an investment vehicle that pools a group of securities into a fund. As its name indicates, it can be traded like an individual stock on an exchange.

What Is an Exchange-Traded Fund (ETF)?

An exchange-traded fund (ETF) is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks.

ETFs can even be designed to track specific investment strategies. Various types of ETFs are available to investors for income generation, speculation, or hedging risk in an investor’s portfolio. The first ETF in the U.S. was the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index.1

KEY TAKEAWAYS

An exchange-traded fund (ETF) is a basket of securities that trades on an exchange just like a stock.

ETF share prices fluctuate throughout the trading day; this is different from mutual funds, which only trade once a day after the market closes.

ETFs offer low expense ratios and fewer brokerage commissions than buying stocks individually. #ETFWatch