In investing, what does the acronym ETF stand for?

In investing, ETF stands for exchange-traded fund.

An ETF is an investment fund whose shares trade on a stock exchange during the trading day, much like shares of an individual company. The fund typically owns a basket of assets, such as stocks, bonds, commodities, or a combination of investments. Buying one ETF share can therefore provide exposure to many underlying holdings.

The first U.S. ETF, the SPDR S&P 500 ETF, began trading in 1993 and tracks the S&P 500 Index. ETFs can be actively managed or designed to follow an index. Their exchange trading distinguishes them from traditional mutual funds, which are generally bought or sold once per day at a calculated net asset value.

ETFs are not automatically low-risk or diversified: a narrowly focused fund may hold only one industry or commodity. Investors should also distinguish an ETF's market price from its net asset value, although authorized participants generally help keep the two prices close.