Why should you invest in an ETF?

One ETF can give investors exposure to many stocks from a particular industry, investment category, country, or a broad market index. ETFs can also provide exposure to asset classes other than equities, including bonds, currencies, and commodities . Portfolio diversification reduces an investor's risk.

Are ETFs more tax-efficient than mutual funds?

ETFs can be more tax-efficient than mutual funds. As passively managed portfolios, ETFs (and index mutual funds) tend to realize fewer capital gains than actively managed mutual funds. Mutual funds, on the other hand, are required to distribute capital gains to shareholders if the manager sells securities for a profit.

Is a stock ETF a good investment?

Unlike a mutual fund, a stock ETF charges minimal management fees and carries low expense ratios. This makes it an ideal tool for investors of any skill level looking to maintain low costs and generate consistent returns .