Exchange-traded funds (ETFs) take the benefits of mutual fund investing to the next level. ETFs offer lower operating costs than traditional open-end funds, flexible trading, greater transparency, and better tax efficiency in taxable accounts.
There are drawbacks, however, including trading costs and learning complexities of the product. Most informed financial experts agree that the pluses of ETFs overshadow the minuses by a sizable margin.ETFs have several advantages over traditional open-end funds. The four most prominent advantages are trading flexibility, low cost, operational transparency, and tax benefits.