ETF (Exchange-Traded Fund)
A fund that trades on an exchange like a single share and usually tracks an index, giving low-cost, diversified exposure to a whole market.
Also called: exchange-traded fund
An exchange-traded fund (ETF) holds a basket of assets, often the constituents of an index. Its shares trade on an exchange throughout the day, like a stock. Because most ETFs track an index rather than trying to beat it, their running costs are usually low.
For a rules-based approach, ETFs are a convenient way to gain broad, transparent exposure to an asset class. Witan Way reads regimes on reference indices, never on a specific named ETF: the fund is the wrapper an investor might choose, not the signal itself.
Related terms
- DiversificationSpreading capital across assets that behave differently, so weakness in one is offset by others. It reduces avoidable risk but does not remove market-wide risk.
- Fund fees (TER)The ongoing cost of holding a fund, quoted as a total expense ratio (TER). Small-looking annual fees compound into large sums over an investing lifetime.
Read it in context
- What an ETF isAn ETF is a fund whose shares trade on an exchange like a single company's. You own shares in the fund and the fund owns the assets, so one purchase gives you exposure to everything inside it. The wrapper is straightforward; what decides your risk is the rule that fills it and what it costs to hold.
- What a world equity ETF actually holds"World" on a fund is not a description of the planet. It names an index, and the major world indices cover very different universes. Some exclude emerging markets entirely, and most weight by market value, which concentrates them wherever prices have risen most.
- Real versus apparent diversificationCounting your funds answers one question about diversification and is silent on another. It tells you something about how exposed you are to any single company failing; it tells you nothing about what your holdings have in common. That is what decides whether they fall together.