An Exchange Traded Fund, commonly known as an ETF, is an investment fund that holds a collection of assets like shares, commodities or bonds. As its name implies, ETFs are traded on exchanges like shares, so they can be bought and sold at any time during the trading day, unlike other types of investment funds.
Essentially, ETFs allow investors to trade a range of assets as one package, rather than having to individually buy all the components – you could think of it as buying a whole portfolio in one step. Because an ETF contains a range of different assets, they are popular among traders and investors looking to diversify their portfolio.
An ETF may contain hundreds or thousands of shares across various industries, or it could be solely focused on one particular industry, sector or investment type. For example, a resource-focused ETF could contain stocks of various mining and logging companies throughout the industry.