Stock ETF

A Stock Exchange-Traded Fund (ETF) is a type of investment fund that holds a diversified portfolio of stocks and is traded on stock exchanges like a regular stock. Stock ETFs allow investors to gain exposure to a broad range of equities or specific sectors with a single purchase. They offer the diversification benefits of mutual funds but are more liquid, as they can be bought and sold throughout the trading day at market prices.

Example

An investor buys shares in an S&P 500 ETF, which tracks the performance of the 500 largest U.S. companies, providing exposure to a broad section of the stock market.