An ETF is an investment fund traded on stock exchanges. ETFs hold assets such as stocks, commodities or bonds and trades close to the net asset value (NAV) over the course of the day. An ETF trades daily on stock exchanges during normal trading hours and therefore ETFs can be bought and sold just like regular shares on the stock exchange, so instead of purchasing one share on the stock market you can purchase the performance of the top 40 shares on the JSE with the purchase of a single ETF unit. Most ETFs track an index such as the FTSE/JSE Top 40 Index (for example Satrix 40 tracks the FTSE/JSE Top 40 Index).
ETFs are similar to unit trusts as you are investing in a basket of shares (a group of shares such as the Top 40 companies on the JSE) in the same way as a unit trust does. However a unit trust only trades once a day where as an ETF trades real time on the stock exchange. And like ordinary shares, the price is available to the public throughout the day.