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.

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.
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