Exchange-Traded Fund (ETF)

An ETF is an investment fund that explicitly tracks the value of an asset like the price of oil or the value of US stocks (as determined by the S&P 500 or another large index). Investors can buy and sell ETFs just like normal stocks – which makes them easy to invest in. Typically, ETFs have low fees as they simply track the value of something else, i.e. they don’t require bankers trying to pick winning stocks. Robo-advisors and other firms often use ETFs to create low-cost investment portfolios for their clients.