Summary of Mutual Funds or Exchange-Traded Funds--Which to Choose?

Special Situations

Exchange-traded funds are available that cover many different asset classes, including areas of the market where there are few if any mutual fund offerings. ETFs may be a suitable option for areas of the market where traditional mutual fund offerings are scarce, such as single country funds or commodity funds. However, as we move outside of more simple stock funds into more complicated assets classes, it is important to conduct more due diligence into the nature of the index, how the ETF attempts to replicate it and its suitability in the portfolio. As in choosing traditional index mutual funds, it's best to evaluate an ETF's fees and the usefulness of the benchmark it tracks before buying in.