ETFs

An exchange-traded fund (ETF) is a basket of securities — stocks, bonds, commodities, or a mix — that trades on an exchange throughout the day like an individual stock, combining the diversification of a mutual fund with intraday liquidity. Most ETFs are passively managed, tracking an index like the S&P 500 at a low annual expense ratio, though actively managed and leveraged or inverse ETFs also exist with different risk profiles and costs. Because ETF shares are created and redeemed by authorized participants rather than the fund buying and selling securities directly for each investor, they're also generally more tax-efficient than traditional mutual funds in a taxable account.