What is an ETF?
By now you can own one company. But what if you wanted to own... all of them? Buying 500 stocks one by one would cost a fortune in time and spreads. In 1990 in Toronto, and from 1993 at scale in New York, finance solved this with an invention as important for investors as the shipping container was for trade: the ETF.
A basket with a ticker
An Exchange-Traded Fund is a fund that holds a basket of assets — for example, all 500 companies of the S&P 500 index — and then divides itself into shares that trade on an exchange exactly like a stock. One ticker, one trade, one price line on your chart… and inside it, five hundred businesses.
The fund itself holds the shares of those 500 companies, weighted the way the index prescribes; buying one ETF share gives you a claim on that entire basket — economically, a microscopic slice of Apple, Microsoft and 498 others at once. When people say "I just bought the market," this is what they mean.
Why ETFs took over the world
- Instant diversification. One purchase spreads your money across hundreds of companies — no single disaster can sink you alone. (Why that matters so much is the heart of the Portfolio domain.)
- Low cost. Index-tracking ETFs charge tiny yearly fees — often less than 0.1% — because they follow a list instead of paying managers to pick.
- Always tradable. Unlike classic funds priced once a day, an ETF trades all session with a live bid and ask, which you already know how to read.
What to check under the hood
An ETF is only as good as its basket and its costs. The three fields that matter: what index it tracks, the expense ratio (yearly fee), and its size/liquidity (big and busy = tight spreads). Everything else is marketing.
In the data
A fund's profile carries fund facts where a company's carries financials. Here are SPY's:
The first three rows are the three checks from above: the index it follows, the yearly fee, and the size. The last row is the trap. A data provider's profile lists a fund's largest holdings, not all of them, and for SPY it lists 50 — so nothing on the page argues with you if you conclude the fund owns 50 companies. It owns about 500. The real count comes from the index the fund tracks, never from the length of a holdings list.
Try it now
- Open a large S&P 500 ETF's profile. SPY, the oldest of them, is linked below; the Terminal page shows its price and its chart.
Open SPY.US in the EODHD Terminal
- Compare its latest % move with a single company's — basket vs single stock, tide vs boat. Both are below, the fund on the first row and Apple on the second; for your own anchor company, change the symbol in the Terminal.
Now catch the trap above with arithmetic instead of trust. Each holding in the list comes with its share of the fund's money. We added up all 50 of SPY's on 29 September 2026: they sum to 64.08%. The total lands far short of 100 — about two thirds of the fund — and what the missing third holds is roughly 450 companies the list never names. Compare the holdings row in the fund facts above with the 500-odd companies in the index it tracks.
Peek at the ten largest of those holdings, below. Odds are, your anchor company is in there — you may have "owned" it all along without knowing.