True or False: An exchange-traded fund (ETF) is a fund that invests in the stocks contained in a specific stock or securities index.

An exchange-traded fund (ETF) is designed to track the performance of a specific index by investing in the same stocks or securities that comprise that index. This is a defining characteristic of many ETFs, particularly those modeled after major indices like the S&P 500 or the Dow Jones Industrial Average. By doing so, ETFs allow investors to gain exposure to a broad range of securities while benefiting from the liquidity and trading flexibility that comes with being exchange-traded.

While there are different types of ETFs, including actively managed ETFs, the fundamental premise of an ETF is often to mirror the performance of an index rather than to engage in active trading strategies. Thus, stating that an ETF invests in the stocks contained in a specific index aligns with the traditional understanding of how ETFs operate. Therefore, classifying the statement as true is accurate.