What is an ETF?

An exchange-traded fund (ETF) is indeed an investment vehicle that holds a diversified portfolio of assets, such as stocks, bonds, or commodities, and is traded on exchanges much like individual stocks. This structure allows investors to gain exposure to a wide range of assets without needing to buy each one individually.

One of the key characteristics of ETFs is their ability to be bought and sold throughout the trading day at market-determined prices, providing liquidity and flexibility that investors appreciate. Unlike mutual funds, which may be traded only at the end of the trading day, ETFs allow for real-time trading and pricing, making them attractive for both retail and institutional investors.

Furthermore, ETFs can track specific indexes or sectors, offering a cost-effective way to achieve diversification and access to various investment strategies.