Exchange-Traded Fund (ETF)

Last updated on
January 14, 2022

An Exchange-Traded Fund is a type of investment fund and exchange-traded product that tracks the performance of an index or a "basket" of securities (such as shares, bonds, commodities, etc.). ETFs are listed on a stock exchange and traded similarly to stocks; they allow investors to diversify their investments at a lower cost and gain access to diverse asset classes like equities, commodities, currencies, and fixed income. ETFs are similar to Mutual Funds. A notable difference though is that ETFs are traded from other owners on stock exchanges throughout the day, whereas mutual funds are traded from the issuer based on their price at the end of the day. As of August 2021, ETF assets hit $9.1 trillion globally.

Nigerian Context

An Exchange-Traded Fund is a type of investment fund and exchange-traded product that tracks the performance of an index or a "basket" of securities (such as shares, bonds, commodities, etc.). ETFs are listed on a stock exchange and traded similarly to stocks; they allow investors to diversify their investments at a lower cost and gain access to diverse asset classes like equities, commodities, currencies, and fixed income. ETFs are similar to Mutual Funds. A notable difference though is that ETFs are traded from other owners on stock exchanges throughout the day, whereas mutual funds are traded from the issuer based on their price at the end of the day. As of August 2021, ETF assets hit $9.1 trillion globally.

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