• Trading on Exchanges: ETFs are listed on stock exchanges and can be bought and sold just like individual stocks. This makes them highly liquid, meaning you can easily buy or sell them during market hours.

Tracking an Index: Many ETFs are designed to track the performance of a specific index, such as the S&P 500. This means the ETF will try to replicate the performance of that index by holding the same or similar assets.

An index is a tool used to measure the performance of a specific group of stocks that represent a portion of the market. It helps investors understand how that segment is performing overall. For example, the S&P 500 Index tracks the performance of 500 large U.S. companies. By monitoring an index, investors can gauge the general market trends without needing to follow each individual stock.

Example of an ETF

Imagine you want to invest in the technology sector but don’t want to pick individual tech stocks. You could buy shares of a technology ETF, which holds a variety of tech stocks like Apple, Microsoft, and Google. This way, you get exposure to the entire sector without the risk of investing in just one company.

Types of ETFs

• Stock ETFs: These hold a collection of stocks and can focus on specific sectors (like technology or healthcare) or broader markets.
• Bond ETFs: These invest in bonds and aim to provide regular income to investors.
• Commodity investments called ETCs: These invest in physical commodities like gold or oil.
• Thematic ETFs: These are investment funds that focus on specific trends or megatrends shaping the future, such as clean energy, cybersecurity, artificial intelligence, and sustainable food. Unlike traditional ETFs that track broad market indices, thematic ETFs target particular sectors or themes, offering investors exposure to areas with significant growth potential.
• Inverse and Leveraged ETFs: These are more complex and are designed to achieve the opposite of the index’s performance (inverse) or amplify the index’s performance (leverag