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What are exchange traded funds (ETFs)?

An exchange traded fund (ETF) is a type of investment that holds securities, such as bonds, commodities, stocks, and trades on a stock exchange. 

The price of an ETF unit will change throughout the trading day as units are bought and sold on the market. For investors, some benefits of ETFs are diversification, flexibility, and low costs. They can be bought and sold like stocks, and offer exposure to a variety of asset classes.

ETFs can also: 

  • Track a specific index, such as the S&P 500;
  • Follow a particular investment strategy, such as investing in renewable energy or technology companies;
  • Be structured to track anything from the price of an individual commodity, to a large and diverse collection of securities;
  • Be actively managed, meaning that the fund's portfolio is selected and maintained by a professional fund manager.