What is an ETF?

Article author
Alexander G.
  • Updated

An ETF (or exchange-traded fund) is a group of investments designed to mirror the performance of an existing index or fund. The most common ETFs track indexes like the S&P 500 index. That means an ETF will hold the same stocks in approximately the same weights as the index it's tracking. So ETFs trade near their net asset value over the course of the trading day. ETFs can be an attractive investment because of their low costs, tax efficiency, and stock-like features.

You can’t invest directly in an index, so ETFs provide a way to benefit from an index’s returns. Acorns portfolios contain a mix of seven ETFs, providing broad exposure to thousands of stocks and bonds. This creates diversification, which can help when some investments are down, and others may be up.


For more about ETFs, see this Learn article

For more about diversification, see this Learn article.

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