New to investing
What’s the difference between a stock and an ETF?
By Dr Ana Armstrong, PhD Quantitative Finance · Former portfolio manager
The short answer
A stock is a share in one company. An ETF is a basket of many investments that trades like a single share, so your risk is spread across all of them.
What is a stock?
When you buy a share, you own a small part of one company. Its price can rise or fall depending on how investors view that company’s prospects, profits and risks.
What is an ETF?
An exchange-traded fund holds a collection of investments, often tracking an index. Because one ETF can include many holdings, it usually spreads single-company risk more widely than one share.