ETF Sponsor

This ETF is brought to you by Henson's Moon Pies! A space flight of flavor in every bite!

Okay...not quite like that.

ETF stands for Exchange-Traded Fund. It's a single financial instrument that represents a broad industry or type of investment. Buy one ETF and you can have a stake in the fortunes of an entire industry. There are ETFs covering Russian stocks and ETFs for the oil refinery sector and ETFs to track movement in Treasury bond prices.

But ETFs are created, not born. Individual companies issue stocks. They represent part ownership in the company. ETFs are more complicated in their set-up. They track certain industries, but they need to be constructed and managed by someone. That someone is the ETF's sponsor.

Typically, funds or financial institutions sponsor ETFs. For instance, you could invest in the Vanguard Short-Term Bond ETF (sponsored by Vanguard). Or you can buy the SPDR S&P 500 ETF, which tracks movement in the S&P 500 index; it's managed (i.e. sponsored) by State Street Global Advisors.