Exchange-traded funds (ETFs) have exploded in popularity since they were introduced in the 1990s. Like a mutual fund, one ETF invests in hundreds of stocks across various sectors. Some mutual funds and ETFs specialize in certain sectors like small cap stocks or consumer staples.
Unlike mutual funds, ETFs usually offer lower fees and greater tax advantages, which is why they’re becoming even more popular with younger investors. Many larger banks including JPMorgan Chase & Co. (NYSE:JPM) and Dimensional Fund Advisors have been converting more of their mutual funds to ETFs for these reasons and to attract new investors.
