Exchange-Traded Funds (ETF) are depository receipts that give investors a pro rata claim on the capital gains and cash flows of securities held by financial institutions.

Question

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ETFs are designed to track the performance of a specific basket of underlying securities such as stocks, bonds, or commodities. When an investor buys an ETF, they effectively own a share in a diversified portfolio of assets, and receive a portion of the profits and cash flows generated by the underlying securities. This makes them different from traditional mutual funds, which are priced once a day after the markets have closed, while ETF prices are constantly changing throughout the trading day.

Exchange-Traded Funds (ETF) Are Depository Receipts That Give Investors a Pro