An ETF is an investment into a fund that trades some asset. This is often a combination of shares of stock, futures, foreign currency etc. These ETFs are usually built to track an asset or index such as the ASX200 Australian share index. They allow you to invest in an asset (the ETF) that will rise and fall like the underlying asset (the collection of stocks in the index).

There are other exchange traded products similar to ETFs (such as XTBs) but are specifically built to trade an underlying bond on the exchange, rather than an index.

With an ETF you don’t own any part of the underlying asset. The fund itself is what owns the asset. Similar to a bond fund, you own a share of the fund and buy or sell that share. This exposes the ETF to the same fluctuations as stocks, and removes the legal obligations of bonds.