What is an ETF (Exchange-Traded Fund)?

In the world of financial markets and investments, one often encounters various terms and concepts that can be quite confusing for the uninitiated. One such term that has gained significant popularity in recent years is an ETF, or Exchange-Traded Fund. So, what exactly is an ETF? Put simply, an ETF is a type of investment fund that is traded on stock exchanges, much like individual stocks. However, unlike traditional mutual funds, ETFs can be bought and sold throughout the trading day, providing investors with more flexibility. They also offer diversified portfolios, allowing investors to gain exposure to a wide range of assets without having to purchase each one individually. ETFs can track various indexes, commodities, bonds, or even specific sectors and strategies, making them a versatile investment tool for investors of all levels.