What exactly are ETFs?

An exchange-traded fund (ETF) is a type of investment security that works much like a mutual fund. Typically, ETFs will track a particular index, like the German stock index (short DAX) or the US technology index NASDAQ. ETFs can be purchased or sold on a stock exchange the same way a regular stock can. One of the most significant advantages of ETFs is the access to many stocks, bonds, and other asset classes across various industries cost-efficiently. In this way, the risk-reward potential can be increased.