An ETF is a security that tracks an index, commodity or a basket of assets. Each ETF has a preselected collection of stocks or bonds. ETFs are less costly than purchasing mutual funds or even buying individual stocks. Each time you buy or sell an individual security you pay trading costs, while an ETF is composed of many securities and you pay only for trading the ETF.
The major benefit to an ETF is the number of securities you might have in the ETF when you purchase it. This can lower your risk. ETFs can also be less work. The selection of securities is left to a professional fund manager, though you should make sure the objectives of the ETF match your own.
