ETFs
Exchange-traded funds: how they work, what they cost and how they differ from individual shares.
An ETF (exchange-traded fund) is a fund whose units trade on an exchange like shares. Most ETFs track an index or a basket of assets.
By buying one unit of an index ETF, an investor gets a share in all the companies in the index — simple diversification.
The fund charges an annual fee (the expense ratio), which reduces the return. The difference between the ETF’s return and the index’s is called tracking error.