What Are Exchange-Traded Funds?

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Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges, much like individual stocks. They offer investors a simple and cost-effective way to gain exposure to a broad range of assets—including stocks, bonds, commodities, or a mix of them—all within a single investment vehicle.

Many ETFs track major market indexes. In North America, some of the most commonly referenced indexes include:

• S&P 500 – Tracks the performance of 500 of the largest companies in the U.S.

• NASDAQ-100 – Focuses on 100 of the largest non-financial companies listed on the NASDAQ exchange, often tech-heavy.

• Dow Jones Industrial Average (DJIA) – Represents 30 significant U.S. companies across various industries.

• TSX Composite Index – Canada’s primary stock market index, covering the largest companies on the Toronto Stock Exchange.

 

By investing in an ETF that mirrors one of these indexes, you gain instant diversification and a low-cost way to participate in the performance of broad market sectors. ETFs are ideal for both beginners and experienced investors looking to build a long-term, balanced portfolio.