By Rob Isbitts via

It depends on how you use them.

When I was a kid growing up in New Jersey, my mother would always remind my brother and me that we had plenty of choices in life. Typically, this took the form of a statement such as “that’s why Baskin Robbins has 31 flavors!” As I spent a day roving around the annual Inside ETFs Conference in nearby Hollywood, Florida, last week, I was reminded that the pace of change in the investment business has become so rapid, entire eras of investment history may pass by without us realizing what has changed.

For those not familiar, Exchange-Traded Funds (ETFs) are securities that represent a basket of other securities, similar to a mutual fund. The key difference with many (but not all) ETFs is that the basket of securities is typically determined by a mechanism designed by the manager. Back in 1993 (69 years after the first mutual fund was created), State Street came up with the pioneering idea that led to the launch of the first ETF. The investor could buy a security that replicated the return of the S&P 500 Index, but could be traded during market hours, unlike mutual funds which are typically priced at the end of the trading day.

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