An ETF stands for Exchange Traded Fund. It’s basically a fund that buys other company’s shares based on a specific criteria. For example there are index tracking ETF’s that buy shares in companies that make up an index such as the ASX200 index or the S&P500 index. For example, if you buy an ASX 200 ETF share for $100, the ETF will use that amount to purchase $100 worth of top 200 companies listed in the ASX 200 index in the same proportion of the comany size. This means if a bank makes up 20% of the top 200 comanpanies, it will purchase $20 worth of share in that bank and $80 worth of shares will be purchased in the remaing 199 companies.