Published 03/04/2014. Exchange Traded Funds (ETFs) are one of the fastest growing types of investment. This video guide introduces you to ETFs, what they invest in and how you can trade them.

00:06 — Exchange Traded Funds — or ETFs for short, are a relatively new type of investment fund.

00:12 — The first ETF was listed on the New York Stock Exchange in 1993. There are now more than 900 traded on the London Stock Exchange.

00:23 — Over 2.1 trillion dollars have been invested in ETFs worldwide.

00:29 — One of the main attractions of an ETF is its ability to provide exposure to areas which were previously either too expensive or inconvenient to invest in.

00:39 — If you want to track the performance of a specific index — for example the FTSE 100 — you no longer have had to purchase shares in each of the constituent companies and incur the large dealing costs.

00:53 — With an ETF. you simply need to buy one share that will track the fortunes of that entire index.

00:59 — The same applies with investments such as precious metals and commodities.

01:03 — Rather than buying a bar of gold, for example, you can simply buy an Exchange Traded Commodity — or ETC — that tracks the price of gold.

01:13 — ETFs combine the benefits of funds and shares.

01:17 — Like a share, you can buy or sell ETFs throughout the day as it trades on the stock market.

01:23 — You can also use limit orders to buy and sell your ETF when it reaches a pre-determined price as set by you.

01:31 — But like a fund, an ETF invests in a selection of assets on your behalf rather than you having to buy each individual asset.

01:40 — Most ETFs aim to track a stock or bond market index — like the FTSE 100 in the UK or the American S&P 500.

01:50 — But you can find ETFs which follow hundreds of indexes worldwide.

01:55 — Exchange Traded Commodities, on the other hand, can follow things such as the price of precious metals oil or agricultural produce.

02:04 — Many ETFs have lower annual charges than a typical actively managed fund.

02:11 — ETFs track index but are not designed to produce market-beating returns.

02:17 — This enables ETFs to keep costs low.

02:20 — For more information, including more details of how they work and their risks, as well as a and to see the full list of ETFs available simply visit www.hl.co.uk/ETF