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What is an ETF?
An ETF (Exchange-Traded Fund) is a fund that trades on an exchange like a stock. It typically holds a basket of assets such as stocks or bonds.
Why people use ETFs
- Diversification in a single purchase
- Often low fees compared to many active funds
- Easy to buy/sell during market hours
Costs to know
The main ongoing cost is the expense ratio. You may also face a bid–ask spread and brokerage fees.
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Common ETF types
- Index ETFs (broad market)
- Sector ETFs
- Bond ETFs
- Dividend ETFs
- Thematic ETFs
FAQ
Are ETFs safer than stocks? ETFs can reduce single-company risk through diversification, but market risk remains.
ETF vs mutual fund? ETFs trade like stocks; mutual funds usually trade once per day at NAV.
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