Portfolio Risk & Return

Exchange-Traded Fund (ETF)

A fund that holds a basket of investments — hundreds of stocks, a set of bonds, a commodity — and is bought and sold on the stock market like a single share, at any time during the trading day. Buying one share of an S&P 500 ETF such as SPY gives a slice of all 500 companies at once. ETFs are popular because they offer instant diversification, usually at a low yearly cost (the expense ratio). The catch is in the label: an ETF is only as diversified as what it holds, and two ETFs with different names can own many of the same companies.

Educational information, not investment advice. See it applied across the screener →