By purchasing one share of a market index ETF, an investor will own the equivalent of many stocks from many industries in their portfolio.
What is an ETF and how does it work?
Exchange-traded funds, or ETFs, are precisely what their name suggests: funds that trade on exchanges and often track a certain index. When you purchase an ETF, you receive a collection of assets that you can buy and sell during trading hours, potentially reducing your risk and exposure and assisting with portfolio diversification.
Is ETF high risk?
ETFs, which are low-cost and contain a variety of stocks or other securities, are thought to be low-risk investments due to their increased diversity. ETFs are the best kind of asset for the majority of individual investors to use when creating a diversified portfolio.
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