Also called exchange-traded fund
ETF
A basket of securities that trades on an exchange like a single stock. Most track an index, charge very little, and can be bought and sold all day.
Updated 2026-09-05
An exchange-traded fund holds a basket of securities and trades on an exchange like a single stock. Buy one share of a broad index ETF and you own a slice of hundreds of companies, priced continuously through the day.
The structural advantage over a mutual fund, and over the older unit investment trust structure, is the creation and redemption mechanism, which lets large institutions exchange baskets of the underlying for fund shares. That arbitrage keeps the price glued to the value of what the fund holds, and it is also why ETFs are usually more tax-efficient.
See also
- Index fund — A fund that buys everything in an index rather than trying to pick winners. It is the default against which any active strategy has to justify itself.
- Mutual fund — A pooled fund that issues and redeems shares continuously at net asset value, priced once a day after the close rather than traded live.
- Net asset value — What one share of a fund is actually worth, based on what the fund holds. A mutual fund always trades at it; a closed-end fund often does not.
- Diversification — Holding enough uncorrelated positions that no single one can ruin you. It removes company-specific risk and cannot touch market risk.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
