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An Exchange-Traded Fund (ETF) is a type of investment fund that trades on a stock exchange and gives investors exposure to a particular asset such as stocks, commodities, bonds, or foreign currency.

ETFs are created and managed by financial institutions that buy and hold currencies in a fund.

They then offer shares of the fund to the public on an exchange allowing you to buy and trade these shares just like stocks.

Investors in these funds do not directly own the underlying investments, but instead, have an indirect claim and are entitled to a portion of the profits and residual value in case of fund liquidation.

For example, one of the most popular ETFs is the SPDR S&P 500 ETF Trust (SPY), which mirrors the S&P 500, and gives investors exposure to the entire index.