Exchange-traded fund (ETF)
A fund traded on an exchange that tracks an index, asset basket or strategy.
Plain languagePractical exampleConnected reading
01
What is it?
A fund traded on an exchange that tracks an index, asset basket or strategy.
02
Why does it matter?
It can provide diversification in one trade; cost, tracking difference and liquidity affect outcomes.
03
How should it be read?
Review index methodology, total expenses, holdings and price versus NAV.
04
Common mistake
Assuming an ETF always trades exactly at net asset value.
A simple example
During stress, an ETF may temporarily trade at a premium or discount to NAV.