Similar to a regular index fund, an exchange-traded fund (ETF) owns a basket of stocks that mirrors the composition of a market index, such as the Dow Jones Industrial Average or the Standard & Poor's 500. A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold. ETF shares are purchased in the same way that stock is purchased: not from a fund company, but on a stock exchange, with the help of a broker who charges a commission.