What is one of the main conveniences of an ETF?

One of the main conveniences of an Exchange-Traded Fund (ETF) is that it tracks an underlying index. This characteristic allows investors to gain exposure to a specific segment of the market or a diverse portfolio of assets without having to select individual securities. By tracking an index, ETFs provide a passive investment strategy that typically aims to replicate the performance of that index, making it easier for investors to achieve diversification and potentially reduce individual stock risk.

Investors appreciate this convenience because it simplifies portfolio management. Instead of researching and selecting multiple stocks, they can invest in an ETF that reflects the performance of a broader market index, such as the S&P 500, allowing for a more efficient investment approach. This can be especially beneficial for those looking to invest in a specific market segment or asset class without the complexities associated with individual security selection.