ETFs have democratized the way investors can access various assets around the world, such as gold, other commodities, foreign equities and even international bonds. Moreover, ETFs also come with low-costs, portfolio transparency, tax efficiency and can be traded throughout the day.
When comparing ETFs to active managers, the performance is also in favor beta indexing methodologies. According to fund analyst Deborah Fuhr, 81.2% of active large-cap managers in 2011 did not beat the S&P 500.
While the $2 trillion that global ETFs have accumulated is still small compared to the $13 trillion in stock and bond mutual funds, the mutual fund industry is starting to take note. Some mutual fund providers have even turned to ETF products, as well.
For more information on ETFs, visit our ETF 101 category.