Exchange Traded Funds

Exchange Traded Funds

Exchange-traded funds, or ETFs, are a collection of investments such as shares, bonds, money-market instruments, etc., that track an underlying index. They are a mash-up of different investment avenues that offer the best attributes of the two assets – mutual funds and stocks.
ETFs are traded on the stock exchanges and are quite like mutual funds in terms of their regulation, structure, and management.

However, one of the main differences between ETFs and mutual funds is that the former can be actively traded on the bourses at any given time during the day, which allows investors to take advantage of real-time price differentials. On the contrary, mutual funds, whether active or passive, can only be bought/sold at the close of the trading day.