An exchange-traded fund as a mutual fund that trades like a stock. Just like an index fund , an ETF represents a basket of stocks that reflect an index.
It has fancy names such as:
Spiders: because of their SPDR ticker symbol. It is the first ETF (started in 1993) based on S&P 500;
Diamonds: the ticker symbol is DIA. It tracks the Dow-Jones Industrial Average;
Cubes: ticker symbol QQQQ, tracking NASDAQ index;
ETFs reached Australia in March 2001 when Salomon Smith Barney launched its Index Shares 100 product (ASX code IDX). In August 2001, State Street Global joined the fray with the Street Tracks 200 and Street Tracks 50 (ASX codes STW and SFY).