However, investors need to be aware that ETFs also come with their unique set of costs. For example, less liquid ETFs will have higher tracking errors against their underlying index.

Additionally, in looking ahead, it is important to take notice of the impact the emerging markets will have on all market sectors. The billion or two people in the developing world will add to a growing middle class, and the greater demand will apply upward pressure on prices for many goods. Investors may capitalize on this momentum through ETFs holding the various private equity, sectors and commodities that will benefit from the future growth.

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.