An Exchange-Traded Fund (ETF) is a type of pooled investment security that operates much like a mutual fund. An ETF holds assets such as stocks, commodities, or bonds and divides ownership of those assets into shares. Like mutual funds, ETFs are bought and sold on exchanges.The big difference between exchange-traded fund (ETF) and mutual funds is that while all the holdings in a mutual fund are actively managed by professional investors, an exchange-traded fund (ETF) holdings may be passively managed . This means that an index tracking the performance of, say, the S&P 500 will be used to buy and sell stocks in order to replicate the index's performance rather than relying on human judgement. Passive management can lead to lower fees for investors since it requires less labour on the part of the fund manager.
