Newbie ETF lazy guide - 2 minutes to understand what ETF is.

Select a stock, analyze whether it is worth buying, identify opportunities and make trades.

Find some other stocks, repeat the above steps countless times, and finally form an investment portfolio to diversify risk...

This may be the 'correct' investment logic that most people believe in, requiring a lot of time and effort.

However, when we don't have time to choose stocks, does that mean we can't invest?

Of course not. Today, we will introduce an investment tool -ETFwhere one advantage is that it can help you save time and effort in investing.

What is an ETF?

ETF, or Exchange Traded Fund, is essentially a fund. Investing in an ETF is equivalent to investing in a basket of assets such as stocks, options, bonds, and commodities behind it.

The biggest difference between ETFs and typical mutual funds is that ETFs can be traded on an exchange like stocks during market hours. This means that the price of ETFs fluctuates in real-time and transparently, with transactions being instantly executed, unlike other mutual funds that have only one price per day and require several days for subscription and redemption. Due to this feature, ETF prices may experience larger fluctuations compared to mutual funds.

Although ETFs allow us to conveniently and cost-effectively invest in a basket of assets, in practice, the performance of ETFs may not always mirror the underlying index 100%. For example, when comparing the performance of the Nasdaq 100 index with an ETF tracking the index, we may find that the ETF's performance may occasionally lag behind the index. Why does this happen? This is due to tracking errors inherent in any ETF. The larger the tracking error, the further the deviation between the ETF and the underlying index or assets.

There are various reasons leading to tracking errors in ETFs, including trading rules, ETF fees, finance and securities lending, among other factors. In most cases, ETFs with higher fees may exhibit higher tracking errors.