Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks. They hold a diversified portfolio of assets, such as stocks, bonds, commodities, or a combination of these, and are designed to track the performance of a specific index, sector, or asset class. ETFs offer several benefits, including lower expense ratios compared to mutual funds, tax efficiency, and intraday trading flexibility. Investors can buy and sell ETF shares throughout the trading day at market prices, making them a convenient option for building a diversified portfolio. Additionally, ETFs provide transparency, as their holdings are typically disclosed daily. They are suitable for both long-term investors and those seeking to implement specific investment strategies, such as hedging or sector rotation.
