noun

ETF

ee-tee-EF

ETF (noun) means an investment fund that holds a basket of assets such as shares, bonds or commodities, and whose own units are bought and sold on a stock exchange throughout the trading day like an ordinary share. Example: “She moved most of her pension into a low-cost ETF that tracks the whole market.”

noun

An investment fund that holds a basket of assets such as shares, bonds or commodities, and whose own units are bought and sold on a stock exchange throughout the trading day like an ordinary share.

"She moved most of her pension into a low-cost ETF that tracks the whole market."

"The fund manager launched an ETF holding shares in two hundred different companies."

A single unit or share of such a fund, representing a small slice of everything the fund holds.

"He bought forty ETFs at just under ninety pounds each."

How to Use ETF

Learner’s notes

In plain EnglishA ready-made bundle of investments that you can buy and sell on the stock market like a single share.

When to use it

Standard in financial writing and everyday investing talk. Almost always used as the initialism; the full form exchange-traded fund appears mainly in formal documents.

Memory tip

Pronounce each letter separately, ee-tee-ef, and pluralise it as ETFs with no apostrophe.

Trace the full origin ↓

Easily confused with

index fund → mutual fund → investment trust ETN

Common pairings

low-cost ETF ETF provider bond ETF ETF ticker track an index

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She moved most of her pension into a low-cost _____ that tracks the whole market.

Etymology

An initialism of exchange-traded fund.

Origin: English

Synonyms

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exchange-traded fund tracker fund fund pooled fund fund unit share

Related Words

part deal cut share commission stock holding fund

Frequently Asked Questions

What is the difference between an ETF and an index fund?

An index fund is defined by what it does: it tries to match the performance of a market index rather than pick winners. An ETF is defined by how it is traded: its units change hands on a stock exchange during the day at whatever price buyers and sellers agree. Many ETFs are index funds, but an index fund can also be a traditional mutual fund that is priced only once a day, and some ETFs follow an active strategy rather than an index.

Does an ETF mean you own the underlying shares directly?

No. You own units in the fund, and the fund owns the assets. Your unit gives you a proportional claim on the fund's holdings rather than a direct shareholding in any one company, so you do not normally get individual voting rights in those companies.

What does it mean when an ETF 'tracks' something?

It means the fund is built to move roughly in step with a named benchmark, such as a stock index or the price of a metal. The match is never exact; the small ongoing difference between the fund and its benchmark is called tracking error.

Example Sentences

Real-world examples showing ETF in context, drawn from published sources. Any opinions expressed are those of the original source and do not reflect the views of FreeDict.com.

An ETF trades on an exchange like a single share while holding a basket of assets underneath, which is what makes intraday pricing possible.

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