ETF

An ETF bundles many underlying holdings — stocks, bonds, commodities, or other instruments — into a single ticker that trades on an exchange like an individual stock. The bundle composition is defined by the fund's mandate: tracking an index, applying a rules-based screen, or following an active manager's discretion.

Two structural features distinguish ETFs from mutual funds. First, intraday trading: an ETF price moves throughout the trading day, and transactions settle at that live price. Mutual funds price once daily after close. Second, the creation/redemption mechanism: large institutional participants can exchange baskets of the underlying holdings for fresh ETF shares (and vice versa), which keeps the ETF's market price closely anchored to the net asset value of its holdings.

Fees are disclosed as a management expense ratio (MER) for Canadian funds or an expense ratio for US funds. Broad index ETFs are typically 0.03%-0.20% annually; sector, factor, and active ETFs run higher — sometimes into the 0.50%-1.00% range.