What Is An ETF Or Exchange-Traded Funds?

There's no question that exchange-traded funds have become a major part of the investor's toolkit. "ETFs are similar to mutual funds in that they hold a collection of stocks and bonds in a single fund," writes Kiplinger contributor Will Ashworth in his feature "How to Invest in ETFs for Beginners." However, unlike mutual funds, ETFs "are bought and sold on stock exchanges, can be traded anytime the exchange is open, and you can start your ETF investing even if all you have to invest is $50," Ashworth adds.

Assets in ETFs and similar exchange-traded products (ETPs) now exceed $7 trillion, more than four times what they were a decade ago, according to the Investment Company Institute (ICI), the fund industry's trade group.