Exchange traded funds (ETFs) have been around since the 1990’s, but they are just now seeing the fame they deserve. Investors need to understand many of these new ETFs lack a long track record. The recent flood of new ETFs coming to market and the billions of dollars flowing into them is making some people nervous. A three-year return is  simply the milestone to look for, reports Rich Dupree for The Motley Fool.

According to The Investment Company Institute, ETF assets totaled more than $507 billion as of August 2007. By investing in ETFs you get instant diversification, low costs and liquidity isn’t an issue. ETFs are originally modeled after index mutual funds, but they trade like stocks on an exchange. Because ETFs also offer superior tax efficiency, low expense ratios, and transparency, it is easy to see why they are so popular.

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.