Personal Finance Term
ETF
Exchange-Traded Fund
A fund that holds a basket of assets, such as a stock index, and trades on a stock exchange like a single share. It lets you invest in many companies at once, usually at a low cost, through a normal brokerage account.
An ETF pools money to track an index or theme, so buying one share gives you a slice of everything it holds, which spreads your risk across many companies instead of betting on one. Malaysians can buy ETFs listed on Bursa Malaysia through a local broker and CDS account, and can also access overseas ETFs through international brokers, opening exposure to global markets. ETFs typically charge lower ongoing fees than actively managed unit trusts because most simply track an index.
For everyday investors, ETFs are a straightforward way to build a diversified, low-cost portfolio without picking individual stocks. Because they trade like shares, their price moves through the day and you pay brokerage when you buy and sell, so they suit a buy-and-hold approach rather than frequent trading. As with any market investment, the value can fall as well as rise, and a globally diversified, low-fee ETF held for the long term is a common core holding for Malaysian investors.