What is an ETF?
An ETF, or Exchange Traded Fund, is a type of investment that lets you buy a whole group of shares in one go. Instead of choosing individual companies, you buy units in the fund and the fund owns a basket of stocks. ETFs trade on the ASX just like normal shares, so you can buy and sell them through a broker account during market hours.
ETFs are popular because they make investing simple. They give you instant diversification, which means your money is spread across many companies rather than relying on just one. They also usually charge lower fees than traditional managed funds, and they make it easy for beginners to invest in entire markets or sectors without needing to research every company.
For example, an ETF called the ASX200 ETF tracks the 200 biggest companies in Australia. By buying a single unit of this ETF, you effectively own a small slice of all of those companies. Banks, miners, retailers and more. This allows you to benefit from the overall performance of the Australian market without having to pick winners and losers yourself.
In simple terms, ETFs are a beginner-friendly way to invest. They provide access to many companies at once, they are cost-effective, and they can be bought and sold jsut like ordinary shares. That mix of the simplicity and flexibility is why ETFs have become one of the most popular choices on the ASX for new and experienced investors alike.