Among the advantages of Exchange-Traded Funds: They can have significant stock holdings in many different companies, thus diversifying your investments
A common question is: “Just what is an ETF?” A simple way of replying is to explain that, with Exchange-Traded Funds, you can trade shares of a mutual fund on the stock market.
An ETF has been a type of an investment option since the early ’90s. It was Harry Markowitz who revolutionized investing at that time by offering a different way for financial advisors to manage various retirement accounts. Markowitz, who won a Nobel Prize for his work, developed a concept called the modern portfolio theory. Up to then, the general investing ideology was to invest in certain stocks, hoping to find a winner – while avoiding very much risk.