What Is an ETF and How Do You Judge One?

An exchange-traded fund (ETF) holds a basket of assets such as stocks or bonds and trades on an exchange like a single share. Most track an index.

Why it matters for investors

Low expense ratios, large assets, tight trading spreads and diversified holdings usually signal a sturdier fund. Leveraged and very narrow thematic ETFs carry more risk.

Common questions

What is an expense ratio?

The yearly fee charged as a percentage of your investment; 0.03% means $3 a year per