Most ETFs are designed to track a particular market index, such as the S&P 500. Other ETFs follow market segments (small-, mid-, or large-cap stocks), individual countries, specific industry sectors, or commodities such as gold or oil. But keep in mind, you may need active money management from an RIA. ETFs don’t deal directly with individual investors, and use an institutional investor that can then sell the ETF shares to individual investors on the open market. If an individual wishes to sell shares, he or she can do so by selling to other individual investors on the open market. To complete the redemption, the fund does not have to sell anything; it simply distributes the underlying securities to the institutional investor and then dismantles the creation unit. Some of the advantages of an ETF fund: Usually lower expense loads: Because they do not have operational costs, many ETFs have low annual expense ratios. (Don’t forget to review the prospectus) Tax Favored: Low frequency trading may lead to some degree of tax efficiency. Trading: ETF shares are bought and sold on the open market, an investor can use trading tools such as limit or stop-loss orders, “sell short” the ETF shares,   Read more…