Exchange traded funds

What is an ETF (exchange-traded-fund)?

An ETF or commonly known “index” is a statistical measure that tracks the performance of a group of assets, providing a snapshot of a particular market segment or investment strategy. Think of it as a basket containing multiple assets that move together as one tradeable unit. In traditional finance, ETF indexes like the S&P 500 track the 500 largest U.S. companies, while the NASDAQ Composite follows over 3,000 technology-focused stocks.

At its core, an index serves three primary purposes: benchmarking performance against a standard, representing complex markets in simplified form, and enabling diversified exposure through a single investment vehicle. Every index consists of constituent assets, a weighting methodology that determines each asset’s influence, rebalancing rules that govern when and how the composition changes, and selection criteria that qualify assets for inclusion.