On the other hand, an ETF shields individual investors from the decisions of others. “No paying for other people’s commissions, no paying for other people’s market impact, and, by and large, no capital-gains distributions driven by the actions of others.”
ETFs aren’t a fail-safe alternative, since investors are still exposed to the risk of paying too much for an ETF. But, with the correct strategy, long-term investors can benefit from the fairness of ETFs compared to mutual funds. [How to Follow the Trends]
For more stories on ETF basics, visit our ETF 101 category.
Sumin Kim contributed to this article.