An ETF (Exchange-Traded Fund) is a type of mutual fund which is traded as a regular stock on the stock exchange.
Index tracking exchange traded funds (commonly called stocks ETFs) are one of the most popular and most traded exchange traded funds. Among them you may find QQQQ (Qubes), SPY (Spider), DIA (Diamonds), XLF, IWM and others.
Index ETFs gives investors an opportunity to invest into a basket of stocks with a purchase of a single ETF. In this way it cost effective type of investment into indexes and market sectors.
There are three main points why exchange traded funds attract so many investors:
Convenience: Investing in ETFs are as easy as investing in stocks. You just need to buy one as you would buy any regular stock.
Low fees. Like index fund, ETFs have low fees.
Tax efficient. There are no unexpected capital gains/losses when you purchase an ETF. Sell when tax-wise it makes the most sense to you.