An E.T.F. or Electronically Traded Fund are sometimes called the Mutual Fund of the 21st century. Currently there are over a trillion dollars of assets invested in E.T.F.s. Mutual Funds which have been around since the great depression while E.T.F.s only about twenty years. There are some significant differences between the two. We are going to break down the differences in the following few paragraphs in order to help everyone recognize the differences and benefits that they can offer individually. Mutual funds operate by pooling the buying power of many individual investors to buy a group of stocks or bonds which hopefully will creates a share of profits for the investors to benefit from mingling a large amount of investor money. The E.T.F. on the other hand promises very similar results though at a lower cost by giving you an opportunity to invest in a much smaller portion of the market by trading the major indices individually, tracking in a certain sector only, shorting a sector, or in a major commodity only. There are many more ways to invest including exercising options and since they are exchange traded just like stocks you have the ability to trade and customize your portfolio just like stocks. All E.T.F.s are indexes that are similar to an Indexed Mutual Funds though without an active manager. Occasionally some families of E.T.F.s will suffer low trading volume and often times highly sought after groups will have major swings during after hours when U.S. markets may be closed. Now the Mutual Funds price at the end of day after trading closes and will be different in their swings than their sort of newcomer brother. The real decision is in the amount of attention of which you want to pay to earn your gains. If you choose to pursue E.T.F.s in your portfolio they can be more tax efficient than Mutual funds most of the time and at a lower cost but this hinges on how you much you utilize them. A great resource would be to call the professionals here at The 401 Man at 877-775-0812 to find out more information. Or visit our website at The401Kman.com and ask your questions or set up your free initial consultation at your convenience.