Plain-English definitions, reviewed by an independent investor
ETF (Exchange-Traded Fund)
An ETF is a basket of securities that trades on an exchange like a single stock, giving instant diversification.
An ETF is a basket of securities that trades on an exchange like a single stock, giving instant diversification.
(No single formula — tracks an index or theme)
Why it matters
It lets one purchase own hundreds of stocks at a low cost.
Common confusion
An ETF is not the same as a mutual fund; ETFs trade intraday and usually cost less.
Frequently Asked Questions
ETF vs mutual fund?
ETFs trade like stocks all day and tend to be cheaper; mutual funds trade once daily at NAV.
Are ETFs safe?
Broad index ETFs are low-risk relative to single stocks, but still fall with the market.