What is an Exchange Traded Fund?

The first Exchange Traded Fund (ETF) was launched in Canada in 1989 and gained their initial popularity by the launch of the first ETF in the US in 1993.'ETF's has been available in Europe since 2001.

An exchange-traded fund is essentially a portfolio of securities managed by an investment adviser just like a traditional mutual fund investment.

The main difference is that an ETF is listed as a company on the stock exchange. This gives individual investors an opportunity to buy and sell a portfolio of stocks through dealing in a single listed share.

ETFs have become increasingly popular over the years particularly with experienced investors. This is because investments can be made and redeemed on the stock exchange at any time of day (when the exchange is open), in exactly the same way that you would buy or sell shares in any other listed company.

Most ETFs are created with the aim of matching the performance of market indices, which are typically well known references for a market, such as the FTSE 100 Index.