ETFs, what are they actually? If you have already wondered that, you ve come to the right place! In this chapter we give you a fundamental explanation of ETFs as stock markets traded index funds. An ETF or Exchange Traded Fund is an investment fund that is traded on the stock exchange. Simply imagine an ETF as a basket of stocks, bonds or other securities, which enables investors to invest broadly in various markets or industries. By buying ETF shares, you indirectly acquire a piece of this basket. The course of an ETF changes during the day depending on the price movements of the securities it contains. Now you are wondering: Why should I invest in ETFs? This is where the advantages come: First, ETFs offer an easy way to invest diversified. Since an ETF can cover an entire market or an entire industry, you minimize your individual risk. This means that you do not depend on the development of a single share or bond, but on the overall performance of the market or the industry. Second, ETFs are usually inexpensive.