An ETF is an index fund
In most cases, an ETF is an index-tracking fund. In an ETF, you get the same risk diversification that you achieve in a traditional index fund. By investing in an ETF you can easily and at low cost gain immediate exposure to the market in which you have chosen to invest, such as an equity or fixed income market in a particular region, a broad basket of commodities or a specific equity sector.
The major difference between an ETF and a traditional index fund is that an ETF is traded on the stock exchange, which means it is priced and can be bought and sold in real time, just like equities.
With exchange trading, you can quickly and easily follow the daily fluctuations on the market you have invested in. An exchange-traded fund (ETF) allows you to be active with your investments and gives you the opportunity to take advantage of the fluctuations in the market based on your market outlook.