{"format":"alysly-page/1","url":"https://alysly.com/learn/what-are-etfs/","json":"https://alysly.com/json/learn/what-are-etfs/index.json","lang":"en-US","title":"What Are ETFs? Simply Explained – Alysly","description":"An ETF bundles many stocks into one fund that trades on an exchange like a single share. How ETFs work, what they cost and how to see what they hold.","published":"2026-07-11T10:41:44+02:00","modified":"2026-11-01T18:26:04+01:00","alternates":[{"lang":"de-DE","url":"https://alysly.com/de/lernen/was-sind-etfs/","json":"https://alysly.com/json/de/lernen/was-sind-etfs/index.json"}],"about":"Machine-readable version of the page at url. It contains the text, tables and key figures published there, but not the interactive charts and tools.","breadcrumb":[{"name":"Investing & Trading Basics","url":"https://alysly.com/learn/"},{"name":"Level 0","url":"https://alysly.com/learn/#level-0"},{"name":"What Are ETFs? Simply Explained","url":"https://alysly.com/learn/what-are-etfs/"}],"content":[{"type":"paragraph","text":"Level 0 Investing & ETF Basics · Part 1/16"},{"type":"heading","level":1,"text":"What Are ETFs? Simply Explained"},{"type":"paragraph","text":"By Alexander Bock, founder and data analyst","links":[{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"An ETF (exchange-traded fund) is an investment fund that is bought and sold on a stock exchange like a single share. One unit does not represent a single company but a small slice of many companies at once."},{"type":"image","src":"https://alysly.com/img/ta/etf-basket.42a7d2d535b3cb0cee7273e38946faf269de213efcec6365c48e722152b48ec1.webp","alt":"On the left one large field for a single stock, on the right the same capital spread across a hundred small fields"},{"type":"paragraph","text":"The same capital, two routes: (1) in a single stock everything depends on one company, (2) an index fund spreads it across many. The graphic shows 100 fields; an MSCI World ETF holds more than 1,000 companies. Diversification protects against single companies failing, not against the whole market falling."},{"type":"heading","level":2,"id":"how-an-etf-works","text":"How an ETF Works"},{"type":"paragraph","text":"Most ETFs track an index. Examples are the S&P 500 with 500 large US companies and the MSCI World with around 1,250 companies across 23 developed markets. Money in an MSCI World ETF is spread across all of them in proportion to their market value.","links":[{"text":"S&P 500","href":"https://alysly.com/markets/indices/sp500/"},{"text":"MSCI World","href":"https://alysly.com/markets/indices/msci-world/"}]},{"type":"paragraph","text":"The ETF is passively managed: it follows the index instead of a fund manager picking individual stocks. That keeps costs low."},{"type":"heading","level":2,"id":"what-sets-etfs-apart","text":"What Sets ETFs Apart"},{"type":"list","ordered":false,"items":["Broad diversification: a world ETF spreads its capital across more than a thousand companies, so the failure of any single one has little effect.",{"text":"Low ongoing costs: annual fees (TER) for broad index ETFs in our catalog range from 0.03 to 0.24%. That is a fraction of what actively managed funds charge.","links":[{"text":"TER","href":"https://alysly.com/learn/etf-fees/"}]},"Transparency: the holdings can be checked at any time. Every ETF page on Alysly lists them.",{"text":"Tradability: ETFs can be bought and sold during exchange hours, including small amounts through a savings plan.","links":[{"text":"savings plan","href":"https://alysly.com/tools/savings-plan/"}]}]},{"type":"paragraph","text":"Diversification protects against the risk of individual companies, not against a decline in the market as a whole. A broad ETF can still lose a large part of its value in a crisis."},{"type":"heading","level":2,"id":"how-the-price-stays-close-to-the-holdings","text":"How the Price Stays Close to the Holdings"},{"type":"paragraph","text":"An ETF has two markets. On the exchange, investors buy and sell existing units among themselves. In the background, banks and trading firms known as authorized participants can create new units by delivering the underlying securities to the fund. They can also hand units back in exchange for those securities. If the exchange price drifts away from the value of the holdings, this process makes it profitable to close the gap. That keeps the price close to the net asset value (NAV) during trading hours."},{"type":"paragraph","text":"Some ETFs do not hold the index stocks themselves. Synthetic ETFs replicate the index through a swap agreement with a bank. Most of the large index ETFs in Europe hold their securities physically."},{"type":"heading","level":2,"id":"etfs-index-funds-and-mutual-funds","text":"ETFs, Index Funds and Mutual Funds"},{"type":"paragraph","text":"The terms overlap. An index fund is any fund that tracks an index, whether or not it is listed. A traditional mutual fund is bought from and sold back to the fund company once a day at the NAV. An ETF is a fund that also trades on an exchange during the day. Most ETFs are index funds, and every ETF is an investment fund, but a traditional fund cannot be traded on an exchange. Actively managed ETFs, where a manager selects the holdings, exist as well and make up a small part of the market."},{"type":"heading","level":2,"id":"when-an-etf-pays-dividends","text":"When an ETF Pays Dividends"},{"type":"paragraph","text":"A distributing ETF collects the dividends of its holdings and pays them out. Payouts are most often quarterly or twice a year, in some cases monthly or once a year. The fund sets the payment dates and publishes them. An accumulating ETF reinvests the dividends, so no payment reaches the investor and the fund’s value grows by that amount instead. The difference is explained in distributing vs. accumulating ETFs.","links":[{"text":"distributing vs. accumulating ETFs","href":"https://alysly.com/learn/distributing-or-accumulating/"}]},{"type":"heading","level":2,"id":"how-etf-providers-make-money-the-expense-ratio","text":"How ETF Providers Make Money: The Expense Ratio"},{"type":"paragraph","text":"The total expense ratio (TER) is not billed separately. The fund deducts it gradually from its assets, so it is already included in the published NAV and in the ETF’s performance. At a TER of 0.20%, a holding worth €10,000 costs about €20 a year as long as its value stays the same. Order fees at the broker and the spread between bid and ask prices are added on top. The ETF fees article covers all of them.","links":[{"text":"ETF fees","href":"https://alysly.com/learn/etf-fees/"}]},{"type":"heading","level":2,"id":"short-selling-and-buying-on-margin","text":"Short Selling and Buying on Margin"},{"type":"paragraph","text":"Because ETFs trade like shares, brokers can allow them to be sold short or bought with borrowed money (on margin). Whether that is available depends on the broker, the account type and the country. Both raise the risk. A short position can lose more than the amount put in, and a loan has to be repaid even if the ETF falls. The study why most traders lose money shows how quickly leverage turns an ordinary loss into a forced close-out.","links":[{"text":"why most traders lose money","href":"https://alysly.com/analysis/why-most-traders-lose-money/"}]},{"type":"heading","level":2,"id":"when-etfs-started-a-short-history","text":"When ETFs Started: A Short History"},{"type":"paragraph","text":"The first US ETF, the SPDR S&P 500 ETF Trust, started trading in January 1993. In Germany, ETFs have been traded on Xetra since April 2000."},{"type":"heading","level":2,"id":"what-is-actually-inside","text":"What Is Actually Inside"},{"type":"paragraph","text":"Every ETF page on Alysly shows the top holdings and the breakdown by sector and country. The ETF comparison shows how much two funds overlap.","links":[{"text":"ETF page","href":"https://alysly.com/markets/etfs/"},{"text":"ETF comparison","href":"https://alysly.com/markets/etfs/compare/"}]},{"type":"paragraph","text":"The current composition of the MSCI World as an example:"},{"type":"paragraph","text":"Live data"},{"type":"heading","level":2,"text":"What's Inside – MSCI World"},{"type":"paragraph","text":"Based on: Xtrackers MSCI World UCITS ETF 1d · as of Nov 1, 2026 · 1247 holdings · index page MSCI World","links":[{"text":"index page MSCI World","href":"https://alysly.com/markets/indices/msci-world/"}]},{"type":"table","caption":"What's inside – MSCI World","columns":["#","Stock","Weight"],"rows":[["1","Apple Inc. AAPL","5.62%"],["2","NVIDIA Corporation NVDA","5.39%"],["3","Microsoft Corporation MSFT","4.10%"],["4","Amazon.com Inc. AMZN","2.59%"],["5","Alphabet Inc. Class A GOOGL","1.83%"],["6","Broadcom Inc. AVGO","1.71%"],["7","Meta Platforms Inc Class A META","1.50%"],["8","Alphabet Inc. Class C GOOG","1.45%"],["9","Tesla Inc. TSLA","1.26%"],["10","Eli Lilly and Company LLY","1.21%"]]},{"type":"heading","level":3,"text":"Sectors"},{"type":"facts","items":[{"label":"IT","value":"30.6%"},{"label":"Finanzwesen","value":"16.0%"},{"label":"Industrie","value":"10.7%"},{"label":"Gesundheitsversorgung","value":"9.9%"},{"label":"Zyklische Konsumgüter","value":"8.6%"},{"label":"Kommunikation","value":"7.1%"}]},{"type":"paragraph","text":"This article is for information only and is not investment advice."},{"type":"list","ordered":false,"items":[{"text":"Back Investing & Trading Basics","href":"https://alysly.com/learn/"},{"text":"Next What Is an Index? Rules Instead of Picks","href":"https://alysly.com/learn/what-is-an-index/"}]},{"type":"heading","level":2,"text":"Indices"},{"type":"table","caption":"Indices, performance over the selected period","columns":["Index","1M"],"rows":[[{"text":"Dow Jones","href":"https://alysly.com/markets/indices/dow-jones/"},{"text":"+1.7%","data":{"m1":"+1.7%","m3":"-1.4%","m6":"+4.5%","ytd":"+7.6%","max":"+30.1%"}}],[{"text":"S&P 500","href":"https://alysly.com/markets/indices/sp500/"},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+35.8%"}}],[{"text":"MSCI World","href":"https://alysly.com/markets/indices/msci-world/"},{"text":"-0.8%","data":{"m1":"-0.8%","m3":"+0.6%","m6":"+4.0%","ytd":"+10.2%","max":"+35.3%"}}],[{"text":"MSCI ACWI","href":"https://alysly.com/markets/indices/msci-acwi/"},{"text":"-1.7%","data":{"m1":"-1.7%","m3":"-0.2%","m6":"+2.9%","ytd":"+10.3%","max":"+41.7%"}}]]},{"type":"heading","level":2,"text":"ETFs"},{"type":"table","caption":"ETFs, performance over the selected period","columns":["Fund","1M"],"rows":[[{"text":"SPDR S&P 500 ETF Trust SPY","links":[{"text":"SPDR S&P 500 ETF Trust","href":"https://alysly.com/markets/etfs/us/spy/"}]},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+35.8%"}}],[{"text":"Vanguard S&P 500 ETF VOO","links":[{"text":"Vanguard S&P 500 ETF","href":"https://alysly.com/markets/etfs/us/voo/"}]},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+34.3%"}}],[{"text":"iShares Core MSCI World UCITS ETF USD (Acc) EUNL","links":[{"text":"iShares Core MSCI World UCITS ETF USD (Acc)","href":"https://alysly.com/markets/etfs/ishares-core-msci-world-ucits-etf-usd-acc/"}]},{"text":"-0.8%","data":{"m1":"-0.8%","m3":"+0.6%","m6":"+4.6%","ytd":"+10.9%","max":"+489.0%"}}],[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c XMME","links":[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c","href":"https://alysly.com/markets/etfs/xtrackers-msci-emerging-markets-ucits-etf-1c/"}]},{"text":"-6.3%","data":{"m1":"-6.3%","m3":"+2.4%","m6":"+0.7%","ytd":"+15.2%","max":"+95.2%"}}]]},{"type":"heading","level":2,"text":"Stocks"},{"type":"table","caption":"Stocks, performance over the selected period","columns":["Stock","1M"],"rows":[[{"text":"NVIDIA Corporation NVDA","links":[{"text":"NVIDIA Corporation","href":"https://alysly.com/markets/stocks/nvidia-corporation/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"-10.4%","data":{"m1":"-10.4%","m3":"+1.9%","m6":"+3.1%","ytd":"+9.7%","max":"+60.6%"}}],[{"text":"Apple Inc. AAPL","links":[{"text":"Apple Inc.","href":"https://alysly.com/markets/stocks/apple-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"+3.5%","data":{"m1":"+3.5%","m3":"+11.6%","m6":"+23.0%","ytd":"+26.8%","max":"+51.4%"}}],[{"text":"Tesla Inc. TSLA","links":[{"text":"Tesla Inc.","href":"https://alysly.com/markets/stocks/tesla-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"+12.7%","data":{"m1":"+12.7%","m3":"+28.5%","m6":"+2.3%","ytd":"-11.1%","max":"+65.9%"}}]]},{"type":"paragraph","text":"Data note 1","href":"#dn-1"},{"type":"heading","level":2,"text":"More Studies"},{"type":"list","ordered":false,"items":[{"text":"Jul 21, 2026 Collectibles ×5.4 for the same cards, matched-model index, Mar 2022 – Aug 2026 Is the Pokémon Card Market in a Bubble? 4,159 Sales Analyzed Prices for PSA-graded cards multiplied. Measured on the same cards they rose 438%, while the raw median shows 786% because pricier cards came up for sale later.","href":"https://alysly.com/analysis/pokemon-card-market-bubble/"},{"text":"May 19, 2026 Crypto 45.6% Bitcoin’s annualized volatility, Jul 2024 – Sep 2026 Bitcoin in Investment Portfolios: The Real Numbers Bitcoin is calmer than it was and still about three times as volatile as the stock market. It moves with stocks, not with gold.","href":"https://alysly.com/analysis/bitcoin-investment-portfolios/"},{"text":"Mar 17, 2026 Wealth €1.2m needed for €3,000 a month indefinitely at a 3% real return Living Off Your Returns: What It Really Takes The capital you need is arithmetic. The return you assume is a guess, and it can triple the answer.","href":"https://alysly.com/analysis/living-off-returns/"}]},{"type":"paragraph","text":"View all studies","href":"https://alysly.com/analysis/#studies"},{"type":"heading","level":2,"text":"Learn"},{"type":"list","ordered":false,"items":[{"text":"What Is an Index? Rules Instead of Picks An index is a rules-based basket of securities — the thing an ETF tracks. How the rules work and why weights follow market value.","href":"https://alysly.com/learn/what-is-an-index/"},{"text":"ETFs for Beginners: The Five Basic Decisions Time horizon, brokerage account, choice of index, savings plan or lump sum, and how to handle market declines: the five points that shape an ETF start.","href":"https://alysly.com/learn/etf-for-beginners/"}]},{"type":"paragraph","text":"Course overview","href":"https://alysly.com/learn/"},{"type":"paragraph","text":"Updated Nov 1, 2026 · Content and figures checked Oct 19, 2026"},{"type":"heading","level":2,"id":"note-legend-h","text":"Data Notes"},{"type":"paragraph","text":"All calculations run automatically and are not investment advice."},{"type":"list","ordered":true,"items":[{"id":"dn-1","text":"Returns computed automatically from the price series, excluding dividends, taxes and costs."}]},{"type":"paragraph","text":"Data and methodology: Alysly · Responsible for content: Alexander Bock","links":[{"text":"Alysly","href":"https://alysly.com/methodology/"},{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"View all data notes","href":"https://alysly.com/notes/"}],"structured_data":[{"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://alysly.com/#org","name":"Alysly","url":"https://alysly.com/","logo":{"@type":"ImageObject","url":"https://alysly.com/img/icon-512.png","width":512,"height":512},"description":"Data-driven insights, transparent analysis and powerful tools for long-term investors.","email":"mail@alysly.com","contactPoint":{"@type":"ContactPoint","contactType":"customer support","email":"mail@alysly.com","availableLanguage":["de","en"]},"address":{"@type":"PostalAddress","addressLocality":"Haltern am See","postalCode":"45721","addressCountry":"DE"},"founder":{"@id":"https://alysly.com/#founder"},"sameAs":["https://www.linkedin.com/company/alyslycom/","https://www.youtube.com/@alyslycom","https://x.com/alyslycom"],"publishingPrinciples":"https://alysly.com/methodology/"},{"@type":"Person","@id":"https://alysly.com/#founder","name":"Alexander Bock","jobTitle":"Founder and data analyst","url":"https://alysly.com/about/","sameAs":["https://www.linkedin.com/in/abxk/"]},{"@type":"WebSite","@id":"https://alysly.com/#site","url":"https://alysly.com/","name":"Alysly","alternateName":"Alysly Investment Analysis","inLanguage":"en-US","publisher":{"@id":"https://alysly.com/#org"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://alysly.com/markets/stocks/browse/?q={search_term_string}"},"query-input":"required name=search_term_string"}},{"@type":"WebPage","@id":"https://alysly.com/learn/what-are-etfs/#webpage","url":"https://alysly.com/learn/what-are-etfs/","name":"What Are ETFs? 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