What it is
An exchange-traded fund (ETF) is a type of investment fund that holds a collection of underlying assets, such as stocks, bonds, or commodities, and trades on public stock exchanges throughout the day, much like individual stocks. ETFs offer diversification by bundling multiple assets into a single security and typically aim to replicate the performance of a specific index or market segment.
ETFs are prominent in market news, with discussions around new launches, daily fund flows, and performance relative to their benchmarks. Investors follow mechanics like creation and redemption, where authorized participants interact with the fund to keep its market price aligned with its net asset value. Spot Bitcoin ETFs, for example, track Bitcoin's price directly.
Why it matters
ETFs provide an easy, diversified, and liquid way to gain exposure to various assets, including cryptocurrencies, without directly owning them.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice