Meet ETFs

Imagine shopping for the week. You could buy one banana, one apple or one avocado, but a useful basket contains a bit of everything. An ETFExchange-traded fund — a basket of investments you can buy and sell like a single share. — an exchange-traded fund — is an investment basket.

Instead of buying Apple, Microsoft, Nvidia and hundreds of other companies one by one, you can buy one ETFExchange-traded fund — a basket of investments you can buy and sell like a single share. that owns small pieces of many of them.

A stock gives you exposure to one company. An ETFExchange-traded fund — a basket of investments you can buy and sell like a single share. can give you exposure to hundreds of companies, an entire country, a sector, bonds, commodities or a particular strategy.

A useful analogy: a stock says, ‘I think this artist will blow up.’ An ETFExchange-traded fund — a basket of investments you can buy and sell like a single share. says, ‘I don't know who will blow up, so I'll own the whole festival.’

ETFs can make diversificationSpreading money across many investments so one bad outcome hurts less. accessible and relatively low-cost. But ETFExchange-traded fund — a basket of investments you can buy and sell like a single share. does not automatically mean good investment: it describes the packaging, not what is inside.