An Exchange-Traded Fund (ETF) is a type of investment fund, consisting of a collection of stocks and other securities, that is traded on a stock exchange just like a single stock. ETFs provide investors with a low-cost, highly diversified investment instrument.

ETFs are created and managed by professional fund managers and can track the performance of an index, such as the S&P 500, or a sector or industry, such as energy or technology. Investors who invest a fixed-dollar amount in an ETF can immediately gain access to a cross section of investments, whose performance they can monitor quickly and simply. ETFs will frequently contain hundreds of underlying stocks and other security types, providing the investor with a highly diversified portfolio of investments.

Unlike traditional mutual funds, ETFs can be bought and sold instantly in the open market, offering greater flexibility and liquidity than mutual funds. As a result, ETFs can be a smart choice for investors who want to gain exposure to a wide range of investments without having to research and choose individual stocks. ETFsare also a cost effective alternative to actively managed funds, since they tend to have lower administrative costs and expenses.

Overall, Exchange-Traded Funds provide investors with a simple and cost-effective way to access and invest in a variety of assets or indices, manage their portfolio more easily, and better diversify their investments. Through Exchange-Traded Funds, investors can enjoy the potential for long-term capital appreciation, automatically rebalancing portfolios, better liquidity and greater transparency.