1. ETF’s are traded throughout the day just like regular stock.
2. NAV or Net Asset Value is known. The value of an ETF can be calculated throughout the day because the underlying index doesn’t change.
3. Arbitrage. ETF’s are not traded at systematic premiums or discounts since financial institutions can exchange ETF’s for the underlying assets.
4. Tax Advantages. Very few ETF’s distribute capital gains.
5.ETFs generally have lower costs than other investment products because most ETFs are not actively managed and because ETFs are insulated from the costs of having to buy and sell securities to accommodate shareholder purchases and redemptions. ETFs typically have lower marketing, distribution and accounting expenses, and most ETFs do not have 12b-1 fees.
6.ETFs provide an economical way to rebalance portfolio allocations and to “equitize” cash by investing it quickly. An index ETF inherently provides diversification across an entire index. ETFs offer exposure to a diverse variety of markets, including broad-based indexes, broad-based international and country-specific indexes, industry sector-specific indexes, bond indexes, and commodities.
7.Transparency – ETFs, whether index funds or actively managed, have transparent portfolios and are priced at frequent intervals throughout the trading day.