Financial Times
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Have you ever wished you could buy every stock represented in a high-profile index such as the Nasdaq-100, Dow Jones Industrials or S&P-500, but the cost of buying each stock represented in such an index was prohibitive? Or have you ever wished to own a basket of Internet infrastructure or biotech companies, but didn't know how to accumulate the companies? Now, single securities, known as Exchange-Traded Funds (ETF), can track the performance of a growing number of different index funds. At the most basic level, ETFs are baskets of securities that are traded, like individual stocks, on an exchange. Unlike regular mutual funds, ETFs can be bought and sold throughout the trading day. They can also be sold short and bought on margin - in brief, anything you might do with a stock, you can do with an ETF. Exchange-traded funds can help investors build a diversified portfolio that's easy to track. This text shows how.