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What is an ETF?

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Quick answer

An ETF (Exchange-Traded Fund) is a basket of investments — like stocks or bonds — that you can buy and sell on a stock exchange like a single share. It gives instant diversification, usually at low cost, and trades throughout the day.

Key things to understand

  1. ETF stands for Exchange-Traded Fund.
  2. It bundles many assets into one tradable share.
  3. It offers instant diversification, often cheaply.
  4. Unlike mutual funds, it trades all day like a stock.

People also ask

What is an ETF in simple terms?
A basket of investments you can buy as a single share on a stock exchange.
What's the difference between an ETF and a mutual fund?
ETFs trade all day like stocks and are often cheaper; mutual funds trade once daily at the closing price.
Why are ETFs popular?
They offer easy, low-cost diversification and the flexibility of trading anytime the market is open.