Exchange-traded fund (ETF)

An exchange-traded fund (ETF) is an equity-based product combining the characteristics of an individual share with those of a collective fund. Like unit or investment trusts, ETFs track a group of shares or an asset (eg gold), giving diversified exposure to a market or sector.

Unlike with most funds, the shares held are defined in advance so that when you buy, you know what will be in the fund. This makes ETFs similar to standard index funds, but they’re more flexible: they can be traded through a stockbroker at any time in lots of any size. And costs are low: management fees tend to be around 0.5%, as opposed to the 1% charged by most trackers.

ETFs can also be held in an Individual Savings Account or a Self Invested Personal Pension.

• Watch Tim Bennett’s video tutorial: What is an exchange-traded fund?

Hedge fund manager Hugh Hendry: 'It felt like the sun rose only to humiliate me'

In a series of three short videos, Merryn Somerset-Webb talks to Hugh Hendry, manager of the Eclectica hedge fund, about everything from China to the US, Europe, and Japan.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


22 December 1973: Opec more than doubles the price of oil

On this day in 1973 Opec, the oil price cartel, more than doubled the price of oil from $5.12 a barrel to $11.65.