What is an ETF?
ETF stands for ‘Exchange Traded Fund’, where a basket of securities (the fund) is traded like a single stock. ETFs can be made of stocks, bonds, commodities, or currencies and are typically designed to track the performance of a specific index, like the S&P 500 index for stocks, the US Dollar versus the Euro for currencies, or the price of gold for commodities. Through ETFs, investors can gain exposure to a variety of asset classes or individual sectors within a particular asset class with the ease of transacting in a single security. So instead of buying a dozen or hundreds of individual US technology stocks, for example, investors can invest in the US technology sector with a single ETF, such as the Dow Jones U.S. Technology ETF.