What is Exchange Traded Fund (ETF)?

An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.

ETFs can contain various types of investments, such as stocks, commodities, bonds or a mixture between both. So if you are purchasing an ETF, you are purchasing a pool of investments which are lumped into a single fund. This allows you to invest in multiple assets in a single purchase of an ETF.

Similarly like stocks, ETFs are traded in an exchange. You could purchase a particular ETF during its trading hours. The price of the ETFs would also fluctuate throughout the trading hours as its underlying assets are also changing during the trading hours.

Don Chew
A CFP holder with an engineer's mind with interest in technology, design, innovation and of course, personal finance. Believes design and automation would solve most challenges in our everyday lives. A hobbyist videographer but still far from being even a beginner. Life principles - Joy.