There are myriad reasons why investors should choose exchange-traded funds (ETFs) over mutual funds. Factors such as much lower expense ratios (i.e. lower costs), greater tax efficiency, increased access to targeted markets and much more transparency are just some of the headline reasons why I recommend investors choose ETFs as their primary investment vehicles.
Yet one very important reason why I‚??ve come to really love ETFs, particularly during the past several years, is product innovation.
Now, most ETFs still are index-based, traditional funds that are pegged to particular market indexes such as the S&P 500 or the NASDAQ 100. Yet these funds, known as ‚??vanilla funds,‚?Ě are by no means the only types of ETFs out there. There are leveraged ETFs, actively managed funds, inverse funds, funds that track relative strength and even funds with an ‚??ethical‚?Ě focus.
These days, there‚??s an ETF for just about every flavor of investor, not just the ones who like the taste of vanilla.
Read more about exchange-traded funds and their advantage in innovation at Eagle Daily Investor.