
How ETFs Work
KEY FINDINGS
An exchange-traded fund (ETF) is a pooled investment vehicle with shares that can
be bought or sold throughout the day on a stock exchange at a market-determined
price. Like a mutual fund, an ETF offers investors a proportionate share in a pool of
stocks, bonds, and other assets.
Generally, the price at which an ETF trades on a stock exchange is a close
approximation to the market value of the underlying securities that it holds in
its portfolio.
Example, when you trade ETF on SPY - you trade S&P 500 index.
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