What is an Exchange Traded Fund?

Last Updated: 18 Dec 2015

Exchange Traded Funds (ETFs) are investment funds that trade much like shares. An ETF can hold assets such as shares, bonds or commodities. An example is an ‘index fund’ that aims to ‘track’ an index through holding shares in the same proportion as the shares in the index.

An Exchange Traded Fund’s (ETFs) value is based on the Net Asset Value (NAV) of the underlying assets that it represents. The NAV is the total value of the assets (securities, cash and accrued earnings) held in a fund minus any liabilities, divided by the number of units of the fund on issue outstanding.

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