An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, greatly like stocks. An ETF holds assets such as stocks, supplies, or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs follow an index, such as the S&P 500 or MSCI EAFE. ETFs may be striking as investments because of their low costs, tax competence, and stock-like features. ETFs are the most admired type of exchange-traded product.
Only so-called certified participants actually buy or sell shares of an ETF directly from/to the fund manager, and then only in creation units, large blocks of tens of thousands of ETF shares, which are usually exchanged in-kind with baskets of the basic securities. Authorized participants may wish to invest in the ETF shares long-term, but usually act as market makers on the open market, using their ability to exchange creation units with their basic securities to provide liquidity of the ETF shares and help ensure that their intraday market price approximates to the net asset value of the underlying assets. Other investors, such as individuals using a retail agent, trade ETF shares on this secondary market.
An ETF combines the evaluation feature of a mutual fund or unit investment trust, which can be bought or sold at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be more or less than its net asset value. Closed-end funds are not measured to be "ETFs", despite the fact that they are funds and are traded on an exchange. ETFs have been accessible in the US since 1993 and in Europe since 1999. In 1993, the first country specific ETFs were partnership between MSCI, BGI and a small independent third party Distribution firm called Funds Distributor, Inc. The product ultimately evolved into the iShares brand broadly known around the globe. ETFs conventionally have been index funds, but in 2008 the U.S. Securities and Exchange Commission began to approve the creation of actively managed ETFs. The exchange-traded funds accessible on exchanges differ from country to country. Many of the ETFs listed below are available completely on that nation's primary stock exchange and cannot be purchased on a foreign stock exchange: List of American exchange-traded funds, List of Australian exchange-traded funds, List of Canadian exchange-traded funds, List of European exchange-traded funds, List of Hong Kong exchange-traded funds, List of Indian exchange-traded funds, List of Japanese exchange-traded funds, List of New Zealand exchange-traded funds, List of Singaporean exchange-traded funds, List of South African exchange-traded funds, List of South Korean exchange-traded funds.