An exchange-traded fund (ETF) is a basket of securities that tracks an underlying index. ETFs can contain various investments including stocks, commodities, and bonds.
 | | Term of the Day | Words to Know | | |  | | Exchange-Traded Fund – ETF | An exchange-traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. ETFs are in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like ordinary stock.
Some well-known example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index. ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types. An exchange-traded fund is a marketable security, meaning it has an associated price that allows it to be easily bought and sold. | | Read More » | | Related to "Exchange-Traded Fund – ETF" | | | | Market Index | | A market index is a hypothetical portfolio of investment holdings which represents a segment of the financial market. | | Read More » | | | Diversification | | Diversification is an investment approach, specifically a risk management strategy. Following this theory, a portfolio containing a variety of assets poses less risk and ultimately yields higher returns than one holding just a few. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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