Exchange-Traded Fund
An exchange-traded fund is an investment fund that trades on a stock exchange throughout the day like a share, typically tracking an index, sector, commodity or bond basket.
An exchange-traded fund (ETF) is an investment fund whose shares trade on a stock exchange throughout the trading day, combining the diversification of a mutual fund with the intraday liquidity of a share.[1]
Structure
Most ETFs track an index such as the S&P 500, holding the index constituents or a representative sample. Authorised participants create and redeem ETF shares in large blocks, an arbitrage mechanism that keeps the market price close to the fund's net asset value.[2]
History
The first modern ETF, the SPDR S&P 500 ETF Trust, launched in the United States in 1993. The industry has since grown to tens of trillions of dollars globally, with BlackRock's iShares among the largest providers.[3]
Regulation
In the United States, ETFs are registered with and regulated by the Securities and Exchange Commission under the Investment Company Act of 1940.[2]
Sources
- [1] Exchange-traded fund — Wikipedia
Cited for: Trades intraday like a share while offering fund diversification
- [2] U.S. Securities and Exchange Commission — SEC Primary source
Cited for: US ETFs registered under the Investment Company Act of 1940
- [3] Exchange-traded fund — Wikipedia
Cited for: First modern ETF, SPDR S&P 500, launched 1993