Exchange-Traded Fund (ETF)

An Exchange-Traded Fund (ETF) is a type of investment fund that is traded on stock exchanges. ETFs typically hold a portfolio of securities such as stocks, bonds, commodities, or a combination of these. ETFs are designed to track the performance of an index, such as the S&P 500 or the Dow Jones Industrial Average, or a commodity such as gold or oil.

ETFs are attractive to investors because they offer the convenience of buying and selling shares on a stock exchange, and they typically have lower costs than other types of investments. ETFs can also be used in a variety of strategies, such as asset allocation or hedging.

For example, the SPDR S&P 500 ETF (SPY) tracks the performance of the S&P 500 index. An investor who buys shares of SPY will get a return that is nearly identical to the return of the S&P 500 index. SPY is the most popular ETF in the world, with over $300 billion in assets under management.