ETF (Exchange-Traded Fund)

An ETF is a container. Inside it sits a collection of assets, most often shares in many companies, and the container itself is listed on an exchange with its own ticker symbol. One purchase gets you a proportional stake in everything inside.

That structure is what makes ETFs the usual answer to the question of how to own a lot of companies without buying them one at a time. A broad market ETF may hold several hundred, weighted by size, and the price moves with the collection rather than with any one holding.

ETFs are not automatically broad. There are ETFs tracking a single country, a single industry, a single commodity, and some built to move in the opposite direction to an index. The wrapper says how it trades, not what is in it, so the holdings are the thing to read.

Every ETF charges an expense ratio, deducted from the fund's assets rather than billed to you. It is small in percentage terms and it is charged every year you hold, which is why it is worth looking up.