An ETF, or Exchange Traded Fund, is similar in spirit to an index fund — it usually tracks a market index or a specific theme — but with one key difference: it trades on the stock exchange throughout the day, just like an individual company's share, with its price moving in real time based on buying and selling activity.
To buy or sell an ETF, you need a Demat and trading account, unlike a regular mutual fund which you can buy directly from the fund house or through an app without one. ETFs typically have even lower expense ratios than index funds, but you may also pay brokerage charges on each transaction, and the price you get depends on market liquidity at that moment, which can occasionally cause it to trade slightly above or below its actual underlying value.