Exchange-Traded Funds (ETFs)

Summary

This practice note discusses exchange-traded funds, commonly referred to as ETFs. Generally, an ETF is a hybrid investment product that combines features of a traditional mutual fund (an open-end fund) with those of a common stock traded on an exchange. Like a traditional mutual fund, an ETF pools investors' money in a fund that invests in stocks, bonds, or other assets and, in return, each investor receives an interest in that investment pool. ETFs have many features similar to a traditional open-end or closed-end fund, but they are not mutual funds, and they differ from mutual funds in significant ways that may provide advantages for certain investors over investing in a traditional mutual fund.