What is an ETF (Exchange Traded Fund)?

ETF stands for ‘Exchange Traded Fund’, where a group of securities/stocks is traded like a single stock.

ETFs can be made of stocks, bonds, commodities, or currencies and are typically designed to track the performance of a specific index, like the S&P 500 index for stocks, the US Dollar versus the Euro for currencies, or the price of gold for commodities.

Through ETFs, an individual can gain exposure or invest in a variety of asset classes or sectors within a particular asset class with the ease of transacting in a single security/stock. So instead of buying a dozen or hundreds of individual US technology stocks, for example, investors can decide to invest in the US technology sector with a single ETF, such as the Dow Jones U.S. Technology ETF.