An exchange-traded fund (ETF) is an investment company, typically a mutual fund or unit investment trust, whose shares are traded intraday on stock exchanges at market prices. Retail investors may buy or sell ETF shares through a broker just as they would the shares of any publicly traded company. Very large investors (known as authorized participants) can buy or redeem shares directly from the ETF via in-kind or sometimes cash transactions in large blocks (typically 50,000 shares). The first ETF--a broad-based domestic equity fund tracking the S&P 500 index--was introduced in 1993.
Holdings of debt securities (beginning 2002:Q3), corporate equities, and mutual fund shares are recorded at market value.