Exchange Traded Funds (ETF) consist of a group of underlying securities or stocks. They trade throughout the day. They emulate well known indexes and are offered by several banks & financial institutions. The Vanguard ETFs are the most sought after by retail customers as they have lowest expense ratios & management fees and are geared towards the investor unlike ETFs offered by banks that make fees on commissions. Some ETFs provide dividends e.g. REIT (Real Estate Income Trust)
ETF units are listed on a stock exchange and purchased through a broker. Typically mutual funds are purchased and sold through a mutual fund dealer. The ETFs are not actively managed by a mutual fund manager, as they track a benchmark. The ETF is built using the same stocks that make that benchmark or index. The management expense ratio of ETFs is very low, as they are not paying a manager a salary & bonus to manage the fund. ETF's are provided by all banks & asset management companies.