Indexes and funds

ETF (Exchange-Traded Fund)

A fund that holds a basket of investments and is bought and sold on the stock market like a single share.

Why does it matter?

One purchase can give you a small piece of many companies at once.

How do I read it?

Many ETFs follow an index, but some focus on one industry, country or theme. Every ETF charges a yearly fee, and its price goes up and down with what it holds.

Example

Instead of buying 500 different shares, you can buy shares of an ETF that follows the S&P 500 and own a small slice of all 500 companies at once.