Investing

ETFs

An ETF is a fund that trades on a stock exchange. The ETF structure does not tell you what the fund owns or how risky it is.

4 min

Investing 101 • 06

ETF stands for exchange-traded fund.

It is a fund whose units trade on a stock exchange.

An ETF can hold many kinds of investments.

Depending on the ETF, that could include stocks, bonds, cash-like assets, commodities or a narrow market segment.

ETFs can differ by

01Asset class02Country or region03Industry04Investment strategy05Fees06Risk

ETF describes the structure, not the strategy.

01

ETF A

Could hold a broad mix of global stocks.

02

ETF B

Could hold a narrow group of risky securities.

One label can hide very different portfolios.

ETF 1Thousands of holdings
ETF 220 holdings
BothStill ETFs
RiskCan be very different

An ETF is not automatically diversified or low cost.

Many are broad and inexpensive, but you still need to check the actual holdings, strategy and fees.

Before buying an ETF, read

01Investment objective02Top holdings03Asset mix04Risk rating05Fees and expenses

Remember this

ETF tells you how the fund is packaged and traded.

What it owns tells you what you are actually investing in.

Lesson complete

Reviewed 2026-08-18

Sources

Ontario Securities Commission, GetSmarterAboutMoneyHow Exchange-Traded Funds (ETFs) work ↗Ontario Securities Commission, GetSmarterAboutMoneyETFs ↗
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