What Is an ETF?

An ETF (Exchange-Traded Fund) is an investment fund that holds a basket of assets such as stocks, bonds, or commodities, and trades on an exchange just like a single stock. When you buy one ETF share, you gain exposure to all the underlying holdings at once, which makes it an easy way to diversify. ETFs usually track an index, a sector, or a theme, and often carry lower fees than traditional mutual funds. Because they trade throughout the day, you can buy or sell them at real-time market prices.