ETF

What is ETF - Exchange Traded Fund?

An ETF, or Exchange-Traded Fund, is a basket of investment securities like stocks, bonds, or commodities that trades on a stock exchange just like individual stocks. This means its price fluctuates throughout the day based on supply and demand.

• Trading: Unlike mutual funds, which trade at the end of each day, ETFs can be bought and sold throughout the trading day like regular stocks, allowing for greater flexibility and potentially lower trading costs.
• Variety: ETFs come in countless flavors, tracking market indices (like the S&P 500), specific sectors (e.g., technology), or even niche assets like cryptocurrencies.

ETF vs Mutual Fund

Feature	ETF	Mutual Fund
Trading	Throughout the day	Once daily, after market close
Liquidity	Highly liquid, buy and sell instantly	Less liquid, order may not be filled at desired price
Fees	Typically lower expense ratios	May have higher management fees and sales charges
Transparency	Real-time price updates	Net Asset Value (NAV) calculated once daily
Minimum investment	Varies, often lower than mutual funds	May have minimum investment requirements

ETF vs Index Fund

Feature	ETF	Index Fund
Investment objective	Track a specific index passively	May track an index or have actively managed components
Management	Passively managed, follows index composition	Can be passively or actively managed
Fees	Generally lower fees	Fees may vary depending on management style
Flexibility	Can be traded throughout the day	Typically bought and sold at the end of the day