ETFs and Mutual FundsMutual funds are investments that contain pools of individual stocks or bonds specifically chosen by a fund manager or team1. Exchange-traded funds or ETFs are offshoots of mutual funds that allow investors to trade index portfolios1. Although ETFs retain many of the characteristics of mutual funds – including that they are a pool of investments, have low costs and have advantages such as the ability to achieve diversification and asset allocation. Assets – ETFs offer benefits that mutual funds cannot. Disadvantages of ETFS The popularity of ETFs has grown exponentially in recent years due to their flexibility and efficiency. They are often recommended to investors because they offer the following advantages: Low CostETFs, like mutual funds, are simple and inexpensive. On average, ETFs are actually cheaper than their comparable mutual funds because there are no loads (fees) and operating expenses are much cheaper. Average Total (TOT +0.46%) Operating Expenses Mutual Funds ETFUS Large-Cap Stock 1.31% 0.47%US Mid-Cap Equity 1.45% 0.56%US Small-Cap Equity 1.53% 0.52%International Equities1.57% 0.56%Taxable Bonds 1.07% 0.30%Municipal Bonds 1.06% 0.23%Chamberlain, Michael. “What’s the difference?” Forbes. Np, and Web. April 2, 2014. LiquidMutual funds can be bought or sold based on the day's closing price. ETFs can be bought or sold during the day, you can quickly enter and exit the market throughout the trading day. This offers investors the opportunity to bet on the direction of short-term market movements - daily fluctuations in securities.Tax AdvantagesETFs are tax efficient and very few, if ever, are eliminated...... middle of paper.. .... Ads can be used for speculative trading strategies such as short selling (1) and margin trading (2). Overall, regardless of your investment, Smart Beta ETFs are ETFs designed for outperformance and that track a rules-based index. They are transparent in that they provide exposure to specific risk factors other than size weighted by market capitalization, growth, value or industry sectors. Additionally, they are inexpensive and provide the best benefits of active and passive investing.(1) Short selling occurs when the sale of shares does not belong to the investors, but has been borrowed by through a broker and subsequently purchased to replace the loan1(2). Margin trading occurs when a security is purchased with money borrowed in part from a broker. The margin is the net value of the investor's account11 Bodie, Zvi, Alex Kane and Alan J. Marcus. Most of the investments. Ninth ed. Np: McGraw, 2013.Print.