Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents.

In case of investment in any mutual fund scheme one can buy or sell units only on closing NAvs however in case of ETFs one can buy and sell (subject to availability of buyer/seller) in real-time at a price that changes throughout the day.