The understandable confusion between “exchange fund” and “ETF” is caused by the two very different definitions of “exchange” in their respective names.

An ETF ("exchange-traded fund") is a fund that can be bought and sold on public exchanges. They typically hold a pool of stocks and/or bonds towards a particular investment objective. As an investor, you can buy ETFs with your money at most brokerages.

An exchange fund is a tax-efficient private fund owned by investors who exchange their individual stock for shares in the fund. Exchange funds only accept “in-kind” stock contributions, not money. Also, shares in the fund cannot be bought or sold on public exchanges.

To learn more, read our What is an exchange fund? article.
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