What is an ETF?
An ETF (exchange traded fund) is one security that owns a whole basket of stocks or bonds — often hundreds. You buy the basket in one trade, as if it were a single share, and get diversification from the first euro. That is why it is many beginners' first choice.
Each dot is a stock. You buy the whole basket in one trade.
How it works
Imagine you wanted to own the 500 largest companies in the US. That would take 500 trades and a fortune in commission. An ETF does it for you: the fund owns all 500, and you buy a slice of the fund. If the 500 rise 1% together, your ETF rises about 1%.
Most ETFs are index funds: they simply track an index (say the S&P 500 or the OMX C25) instead of trying to beat it. That keeps costs low.
The four things worth checking
- What it tracks. The whole world? One country? One sector? The broader, the more diversification.
- TER — the yearly cost. 0.1–0.3% is cheap. Above 0.7% you should be able to say why.
- Accumulating or distributing. Does the fund reinvest dividends, or pay them out?
- Size. A fund with many billions under management is cheaper to trade and rarely closes.
What an ETF does not protect you from
Diversification removes the risk of one company going wrong. It does not remove the risk of the whole market falling. If world stocks drop 20%, a world ETF drops about 20% too. That is the price of being in when they rise.
The typical beginner's mistake
Buying five ETFs that all track nearly the same thing (say three different world indices). That is not more diversification — just more to keep an eye on. One broad fund covers most of it.
How you see it in Kiggo
Kiggo recognises ETFs automatically and shows them differently from stocks: an ETF type (e.g. "World" or "Sector"), a diversification ring, a checklist with TER, accumulating/distributing, size and replication — and the fund's ten largest holdings, which you can tap through to. Under "Market" you find 20 hand-picked ETFs in nine groups as a place to start.
Related terms
Frequently asked questions
Is an ETF the same as a mutual fund?
Almost. Both are funds that own many securities. The difference is that an ETF trades on the exchange all day like a stock, while a classic mutual fund is typically priced once a day — and is often more expensive.
Can an ETF go bankrupt?
The fund holds the shares on your behalf, separate from the provider's own finances. If an ETF closes, the holdings are sold and the money paid out. You can lose on price falls, but not on the provider going under.
How is an ETF taxed in Denmark?
Most ETFs on the Danish tax authority's list of equity-based funds are taxed as share income, but on a mark-to-market basis — tax on the year's gain, even without selling. See the entry on mark-to-market taxation.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-07.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
