Investors have been net sellers of stock mutual funds most of the summer. Yet in this abysmal market their love affair with exchange-traded funds, or ETFs, has truly bloomed. In June and July combined, stock funds saw estimated outflows of $60 billion, while ETFs had inflows of $11 billion. What gives them such allure? All the things that suddenly matter when markets turn rocky: diversification, tax efficiency, low costs and portfolio visibility that would make most fund managers blush.
ETFs are stock funds that trade on an exchange like common shares of IBM or Coca-Cola. The first ones were launched in...
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