What is an Exchange Traded Fund (ETF)?
An exchange traded fund (ETF) is an investment vehicle that combines key features of traditional mutual funds and individual stocks. Like index mutual funds, ETFs represent diversified portfolios of securities that track specific indexes. Like stocks, they can be bought and sold (long or short1) on an exchange throughout the trading day. In addition to trading flexibility, key ETF benefits include instant portfolio diversification, tax efficiency, and transparency of cost and holdings.
1 With short sales, you risk paying more for a security than you received from its sale.