ETFs are a type of mutual funds that tracks an index, a commodity or a basket of assets like an index fund. However, unlike regular mutual funds, Exchange-Traded Funds are listed on an exchange, and trades like a stock. It, thus, experiences price changes throughout the day as and when it is bought and sold. Assume a fund that has all Sensex 30 stocks. Let’s call it the Sensex Fund. This fund, with its basket of 30 stocks, gives you the advantage to diversify your risks. Trading in an ETF is just like buying or selling the Sensex Fund or any other Index Fund listed on the Stock Exchange. Since the Sensex Fund trades like the stock, the price of the Sensex Fund fluctuates during the market hour. This is unlike a mutual fund, whose NAV, or price, is calculated at the end of the day.