Originally two or three exchange traded funds (ETFs) were conceived to track major indexes, but now the potential growth for ETFs seems unlimited.

Today, ETFS are widely used as investment instruments for portfolio strategies according to Jim Ross, senior managing director of State Street Global Advisers, in an interview done by Katy Marquadt for US News & World Report.

ETF investors who use a traditional brokerage account can invest within a sector with multiple holdings in a single trade. Transparency and knowing what you are buying is also an important feature that ETFs deliver.

New investors who want to wade the ETF pool with a couple of thousand in hand should consider looking for one or two ETFs that would cover the whole U.S. market or the whole world.

In the future, Ross says there will be more products such as target-date ETFs and those that group existing ETFs into a single giant fund. It is assumed that ETFs will grow in volume in terms of assets and products. But the more pressing query is whether ETFs will stay independent or if asset managers and fund complexes will buy up ETFs.

Meanwhile, November was another good month in terms of net asset inflows for ETFs. Index Universe reports that more than $26.3 billion went to ETFs, blowing October’s $7.3 billion out of the water.

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Tags: Sector ETFs