The Ups and Downs of ETF Investing

All News:

• Platinum and Palladium ETFs are Long-Term Bets
• Nasdaq ETF Near 200-Day Average as Apple, Cisco Weigh
• Bank ETFs Hit Again on Economy, Capital Levels

Exchange traded funds (ETFs) are tailored to fit into any portfolio, and are structured like a stock, but carry the diversity of  a mutual fund. But as with anything popular, they have their detractors, who can be a vocal lot.

When it comes to ETFs, everyone’s got an opinion. While some are advocates of these easy-to-use securities, others see them as harmful. The New York Times reports on certain points some investors have brought up that are advantages and disadvantages to using ETFs.

• ETFs allow you to separate from your investments, especially in volatile markets.  Emotional attachment isn’t good and has done in many an investor. But it’s harder to get attached to a basket of stocks than an individual company. [How to Begin Using ETFs.]
• Some consider an ETF the hallmark of a manager that has given up on stock picking. But those who understand know that single-stock picking is challenging. If you can’t beat the market, why not buy the market? [ETF Criticisms: Fact or Fear?]
• Some believe that ETFs will save their portfolios in down markets. This isn’t any truer with ETFs than it is with other securities. They’re a good tool when used smartly with a strategy, but they can also cause harm if used incorrectly. There’s no such thing as a magic bullet.

For more stories about ETFs, visit our ETF 101 category.

Tisha Guerrero contributed to this article.