For example, an ETF that tracks the S&P 500® index (SPX) is trying to mirror the performance of companies in the S&P 500.
Most ETFs are considered passive investments because they are based on an index. Index-based ETFs are similar to those mutual funds known as "index funds," meaning they track market indexes to replicate the performance of a certain part of the market. For example, an ETF that tracks the S&P 500® index (SPX) is trying to mirror the performance of companies in the S&P 500. ETFs trade like stocks on an exchange, and their price changes throughout the day as shares are bought and sold.