An ETF, or Exchange-Traded Fund, is a type of investment fund that holds a collection of assets, such as stocks or bonds. Unlike mutual funds, ETFs are traded on stock exchanges, allowing investors to buy and sell shares throughout the trading day at market prices. This provides flexibility and liquidity for investors. ETFs often track specific indexes, like the S&P 500, which means they aim to replicate the performance of that index. They typically have lower fees compared to mutual funds, making them an attractive option for both individual and institutional investors looking for diversified exposure to various markets.