What’s an exchange traded fund?

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Exchange traded funds (or ETFs) are among the fastest growing financial products in the world, and with good reason. This is because ETFs are one of the easiest and cheapest ways you can diversify your portfolio.

They're easy because you buy the ETF just as you would buy a share on the stock market. Having said that, there is a big difference between a share and an ETF. Where as one share in a company gets you just that - one share - one ETF gets you what's basically equivalent to lots of little shares in many different companies.

They're cheap because in just one transaction you can buy yourself a slice of the profits or losses of all the companies included in that ETF. And while there's a small management fee involved, it will cost you relatively less than buying the same companies separately or paying fees to a managed fund for similar exposure.

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