GLOSSARY TERM
ETF (Exchange-Traded Fund)
An ETF is a fund that holds many investments and can be bought and sold on the stock exchange, much like a share.
What does this mean in practice?
When you buy an ETF, you are buying a small part of a basket of investments rather than just one company. An ETF can hold stocks, bonds or other assets. Many ETFs follow an index, which means they aim to track a market such as global stocks or European companies. These index-tracking ETFs are often quite low-cost, which is one reason they are popular with long-term investors. ETFs also come in accumulating (ACC) and distributing (DIST) versions. ACC ETFs reinvest income inside the fund, while DIST ETFs pay it out to the investor.
Example
If you buy a world equity ETF, your money is spread across many companies in different countries. Instead of choosing each company yourself, you buy them together in one simple product.
Why it matters
ETFs can make investing simpler, cheaper and more diversified. For many long-term investors, they are an easy way to build a portfolio without needing to pick individual stocks.
Continue your path
Ready for the next step? Follow the Start Here path.
Go to Start Here