Lingo every investor should know
ETF is not shorthand to be used in a text message -- unless that text happens to be about investing. Rather, it's a benign term that stands for exchange-traded fund. An ETF represents an investment fund, and in that regard looks much like a mutual fund.
Unlike mutual funds, however, which compute a net asset value of their holdings at the end of each trading day, ETFs are bought and sold on stock exchanges throughout the trading day. Historically, most ETFs tracked an index, such as the Standard & Poor's 500, but today they can invest in other things as well. "You're seeing a lot more ETFs out there today," says Rimel. "The proliferation of ETFs is similar to what we saw with mutual funds 15 years ago."