An exchange-traded fund (ETF) is a basket of securities that tracks or seeks to outperform an underlying index. ETFs can contain investments such as stocks and bonds, allowing you to invest in many securities all at once.They trade on an exchange like stocks, with prices fluctuating throughout the trading day, unlike 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. ETFs can be purchased commission-free on some platforms and are generally cheaper than mutual funds. They diversify risk by creating a portfolio that can span multiple asset classes, sectors, industries, and instruments. Each ETF has a prospectus that outlines its investment objectives, strategies, fees, and more.
