An exchange-traded fund (ETF) is a type of investment fund that tracks the performance of a particular market index, sector, or asset class. ETFs are traded on a stock exchange and can be bought and sold like any other stock. ETFs provide investors with a convenient, low-cost way to gain diversified exposure to a particular market or sector.
Unlike mutual funds, which are actively managed by a fund manager, ETFs are passively managed and track the performance of the underlying index. ETFs are also more tax efficient than mutual funds, as they do not incur capital gains taxes until they are sold. They also tend to have lower operating expenses than mutual funds.
ETFs are an attractive option for investors who are looking for a low-cost way to gain diversified exposure to a particular market or sector. ETFs are also a good choice for investors who want to take advantage of short-term market opportunities, as they can be bought and sold quickly and easily.
In summary, ETFs provide investors with a low-cost way to gain diversified exposure to a particular market or sector. ETFs are also tax efficient and have low operating expenses. For these reasons, ETFs have become increasingly popular with investors.