ETF

An ETF, short for exchange-traded fund, is a fund that holds a basket of assets such as stocks or bonds and trades on a stock exchange just like an individual stock. Buying one share of an ETF gives an investor exposure to everything the fund holds, which is what makes ETFs a common way to get instant diversification in a single trade.

Most ETFs are passively managed, meaning they simply track an index such as a broad market index or a specific sector, and charge a low ongoing fee for doing so. Because ETFs trade throughout the day at a live market price, they behave differently from mutual funds, which are priced only once per day after the market closes.