An ETF (exchange-traded fund) is a fund that holds a basket of investments, such as stocks or bonds, and trades on an exchange like a single stock.
Many ETFs track an index such as the S&P 500, which keeps their costs low. You can buy or sell them during the trading day through a brokerage account. The yearly fee is called the expense ratio.
Why it matters to you
ETFs make it easy and cheap to diversify, which is why they are popular for retirement and long-term investing.
FAQ
What is ETF?
An ETF (exchange-traded fund) is a fund that holds a basket of investments, such as stocks or bonds, and trades on an exchange like a single stock.
What is the difference between an ETF and a mutual fund?
ETFs trade all day on an exchange at market prices; mutual funds are bought and sold once a day at their closing value.
Are ETFs safe?
An ETF is only as safe as what it holds. A stock ETF can fall in value like stocks do.
