7. You can play asset classes that weren’t available before. If you’re a retail investor, no question that ETFs have widened your world. In an inexpensive and convenient package, you can now get exposure to currencies, commodities and fixed-income in ways that you never could even a decade ago. [7 Commodity ETFs You Should Know More About.]
8. You can get easy diversification. In one purchase, you can own an ETF that has 25 stocks, 500 stocks or even a few thousand. While this doesn’t give you the same exposure as a single stock would, diversification like this has its own benefits: you can play an entire sector instead of trying to guess what the one outperforming company will be and owning multiple stocks spreads your risk. [Mutual Funds, Step Aside.]
9. You can tailor your portfolio to your risk appetite. If you want a lot of risk, you can invest in narrowly-focused ETFs and even a few leveraged funds. If you want less risk, you can choose from the many broader funds available and incorporate some steady Treasury bond funds.
10. You can’t beat ’em. ETFs may not overtake the mutual fund industry anytime soon, but more investors are discovering their merits and, as a result, shifting their assets from mutual funds over into them. Some have called ETFs the most important financial innovation in decades, and we couldn’t agree more. [The ETF Investor’s Survival Guide to Trendless Markets.]
For more stories about mutual funds, visit our mutual fund category.
Tisha Guerrero contributed to this article.