what is ETF?

ETF (Exchange-Traded Fund)

An ETF (Exchange-Traded Fund) is a type of investment fund that’s traded on the stock exchange—just like a regular stock.

It tracks the performance of a specific index, sector, commodity, or asset group (e.g., S&P 500, gold, tech stocks).

🔹 How ETFs Work

When you buy an ETF, you’re investing in a basket of assets—not just one company.

For example, buying an S&P 500 ETF means owning small portions of 500 major U.S. companies.

🔹 Advantages of ETFs

Diversification: Invest in many assets at once, reducing risk.

Low Cost: Lower fees than traditional mutual funds.

Liquidity: Buy and sell anytime during market hours.

Transparency: Holdings are usually disclosed daily.

🔹 Common Types of ETFs

Index ETF: Tracks market indexes (e.g., Nasdaq 100, S&P 500)

Sector ETF: Focuses on specific industries (e.g., tech, healthcare)

Bond ETF: Invests in government or corporate bonds

Commodity ETF: Tracks gold, oil, or other raw materials

🔹 Example

If you invest $100 in a Nasdaq ETF, you indirectly own small shares of major tech companies like Apple, Microsoft, and Amazon.

Tags:

#ETF #Investment #Finance #StockMarket #Economy

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