What It Is and How to Invest
What Is an Exchange-Traded Fund (ETF)?
An exchange-traded fund (ETF) is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks—even specific investment strategies. Various ETFs are available to investors for income generation, speculation, or hedging risk in an investor’s portfolio. The first ETF in the U.S. was the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index.
Key Takeaways
- An exchange-traded fund is a basket of securities that trades on an exchange just like a stock.
- ETF share prices fluctuate throughout the trading day unlike…
