As the name implies an Exchange Traded Fund (ETF) is a fund which trades on an exchange. Historically most ETFs have tracked well known indices by buying all or almost all the stocks or bonds that constitute an index, although today there are many variants. ETFs provide a simple, cost efficient way to gain a diversified exposure to a basket of stocks or bonds without having to go and buy every single one yourself.
FTSE 100 Index:
Financial Times Stock
Exchange 100 share index
measures the performance of the 100 largest most actively traded companies listed on the London Stock Exchange.
FTSE 100 Exchange Traded Fund: This would be a single fund trading on an Exchange giving exposure to the Index. It would be made up of the underlying stocks in the Index.
What are the PROs of Equity Index ETFs?