Charles Jaffe from the Baltimore Sun raises the question, are exchange traded funds better than mutual funds?  Many people may be wondering the same thing, but Jaffe finds that individual circumstances answer that question.

He summarizes the pros and cons of ETF investing, which is good to review now and again:

  • ETFs replicate index products, although some benchmarks may be new and not have a track record;
  • ETFs have lower expenses and are tax efficient, however this could be marginal depending on the fund;
  • ETFs trade throughout the day, giving investors flexibility;
  • ETFs can be bought on margin;
  • Buying or selling an ETF triggers a commission since it is bought through a broker, this may not be advantageous to someone investing every month or quarter, but there are innovative companies out there working to make ETF investing better for small investments.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.