Exchange traded funds (ETFs) have become popular because they are flexible, transparent, diverse and trade as easily as stocks. ETFs are easy to track with their unique ticker symbol which allows the investor to get real-time pricing information up to the minute. Investors can buy them on margin, sell short and place limit orders for the price of a regular stock commission, told by Marie Beerens of Investor’s Business Daily.

ETFs provide instant diversification and are convenient when you don’t know which stock to pick in a certain sector or market. They also have a lower turnover, lower expense ratio and management fees than an actively traded mutual fund. Because the ETF manager does not need to sell the underlying stocks to meet redemption needs, there are fewer capital gains and lower taxes.

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.