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.
Trading on the stock exchange means that you can quickly and easily monitor the daily movements of the market in which you are invested. An ETF is therefore an investment alternative for active investor who wants to take advantage of market fluctuations, just as quickly and easily as you would trade equities. However, an ETF can also be an excellent option for long-term savings, particularly considering their low fees.