An ETF (Exchange-Traded Fund) is a basket of assets that trades like a stock.
It’s one of the easiest ways to get diversified exposure to a market, because instead of buying hundreds of individual stocks, you can buy one ETF and instantly hold them all in the right proportions.
Famous ETF Examples
Two of the most well-known ETFs are:
- SPY (SPDR S&P 500 ETF) → Tracks the S&P 500 Index, which represents 500 of the largest U.S. companies.
- QQQ (Invesco QQQ Trust) → Tracks the Nasdaq-100 Index, focused on the 100 largest non-financial companies listed on the Nasdaq.
Both hold many different stocks in specific weights. For example:
| ETF | Top Holdings (2025) | Weight |
|---|---|---|
| SPY | Apple (AAPL) | ~7% |
| Microsoft (MSFT) | ~6% | |
| Amazon (AMZN) | ~3% | |
| NVIDIA (NVDA) | ~6% | |
| Alphabet (GOOGL + GOOG) | ~4% | |
| … | ~495 other companies | ~74% |
| QQQ | Microsoft (MSFT) | ~8% |
| Apple (AAPL) | ~7% | |
| NVIDIA (NVDA) | ~7% | |
| Amazon (AMZN) | ~5% | |
| Meta Platforms (META) | ~4% | |
| … | ~95 other companies | ~69% |
Why ETFs Matter
- Diversification: One purchase gives you exposure to many companies.
- Liquidity: You can buy and sell ETFs like a stock during market hours.
- Cost efficiency: ETFs often have low fees compared to mutual funds.
👉 For example, buying just one share of SPY means you indirectly own a piece of all 500 companies in the S&P 500.
That’s a powerful way to invest without picking individual stocks.