ex·change-trad·ed fund (?ks-ch?nj?tr??d?d)n. Abbr. ETF An index fund whose shares trade continuously on a securities exchange and allow investors to speculate on the performance of the market or sector represented by the fund’s assets without the restrictions of traditional mutual funds.American Heritage® Dictionary of the English Language, Fifth Edition. Copyright © 2016 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.