An ETF is an investment fund that is traded on the stock exchange and usually tracks an index. With a single purchase, you automatically invest in a whole group of shares or other investments. An ETF therefore combines diversification with the convenience of trading on the exchange.

With one ETF, you can invest in dozens or even hundreds of companies at once.

An ETF typically tracks a specific index, such as a global index or a national stock market index. The manager of the ETF ensures that the fund has the same composition as the index it follows.

As a result, the value of the ETF largely moves in line with that index. Because an ETF is passively managed, the costs are often lower than those of actively managed investment funds. You buy and sell an ETF just like a share during market hours, at the prevailing market price.

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