ETFs are popular with younger investors. So, what are exchange traded funds all about?

For some, a new year (and new resolutions) means finally getting around to investing in the stock market.

A popular choice for many first-time investors is a type of investment called exchange traded funds (or ETFs).

But all the jargon can be confusing.

So, many readers have written to us asking us to explain exactly what ETFs are.

Here’s the lowdown

Investing in ETFs is a bit like buying a basket of shares, rather than stock picking, which is where you invest directly in particular companies.

ETFs cover all sorts of investment types, but they’re usually passively managed, which means they don’t aim to outperform a specific benchmark.

Instead, they usually track an index like the ASX200, commodities like gold, or sectors like IT.

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