ETFs are appealing to investors for various reasons. As recent price wars rage on, there are many other factors that make these funds desirable to investors besides low cost.

“Exchange traded funds have gained immense popularity in the recent past, given their holistic investment approach and tax efficiency, coupled with flexibility and ease of investing. ETFs can be viewed as the ultimate asset allocation instrument providing investors a ready made portfolio of stocks or fixed income securities or both,” Eric Dutram wrote for Zack’s. [The Shifting ETF Landscape]

A broad group of investors are finding ETFs appealing as they study their current portfolios of mutual funds and single stocks, Christian Magoon wrote on

The access that ETFs give retail investors is one reason that these tools are appreciated by investors. The easy investment to niche corners of the market and sectors is a trait that ETFs have, at a reasonable cost. Plus, asset classes, bonds, commodities, futures contracts, currencies and grantor trusts can all be accessed with a targeted ETF.

Transparency of holdings is another favorable characteristic of ETFs. The transparency is also available in real time, not just at the close of a trading day. The daily transparency that an ETF has can help investors with asset allocation and avoid over or under exposure to a certain stock or sector. [Sector Investing with ETFs]

Diversification is another area that an ETF satisfies. The ability to give an investor a well-rounded basket of stocks tracking a sector or country is just one example. Other areas that ETF diversification can assist with is portfolio construction, proper asset allocation and risk mitigation. By investing in a basket of numerous companies, if one stock does not do so well, the downside is eased because there is less exposure to the failing company.

The benefits of ETFs extend beyond this list, and most investors will not realize them until they have invested in them. While low cost is a huge advantage of using ETFs, it is certainly not the only one. [Schwab Takes the Lead in ETF Price War]

Tisha Guerrero contributed to this article.

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.