Glossary · Basics
ETF
A fund traded on an exchange that holds a basket of assets.
An ETF (exchange-traded fund) pools money to hold many investments at once — often an index, sector, or theme — and trades on an exchange like a stock. One share can give exposure to dozens or hundreds of underlying holdings.
ETFs are popular with beginners because they offer diversification, transparent holdings, and usually lower costs than many actively managed funds. Like stocks, ETF prices can change throughout the trading day.
Example
An S&P 500 ETF holds shares of the large U.S. companies in that index, so buying one ETF share is a simple way to own a broad slice of the market.