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Education
What are ETFs?
An Exchange Traded Fund (ETF) is a security that trades on a stock exchange and generally tracks the performance of an index. It is a single stock representing a basket of securities underlying the index which can be comprised of stocks, bonds, or other assets such as commodities. The simplest ETFs generally seek to replicate an index. However, ETFs have evolved over recent years to allow for exposure to alternative asset classes, the implementation of more sophisticated investment strategies, and even active management.
Types of ETFs
There are a variety of ETFs that fall into a number of general categories. This wide array of ETF offerings makes it possible to develop a diversified portfolio management strategy using ETFs as core holdings.
How ETFs are Created
New ETFs are created when designated brokers buy the basket of securities underlying the index and exchange them with the ETF provider for newly created ETF shares. New ETF shares are created in the same manner to meet demand in the secondary market.
Glossary of ETF Terms
Our Glossary of ETF Terms provides a comprehensive list of common terminology used when talking about ETFs. You can also use our full list of Stock Market Terms as a handy dictionary of financial terms.
Read the Glossary
View our comprehensive Stock Market Terms directory
