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Portfolios 403: Exchange-Traded Funds

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1.
Like mutual funds, exchange-traded funds invest in _______.
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All of the above. Though they have other differences, both investments have exposure to the same types of assets and sectors (though ETFs have more exposure to niche sectors).
2.
Can exchange-traded funds be good choices for investors who are looking for core stock exposure?
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Yes, because there are several inexpensive, broad market ETFs that track major large-cap indexes.
3.
Commodity or currency exchange-traded funds _______.
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Can provide diversification to a portfolio in small doses. Commodities and currencies can be uncorrelated to broader stock market returns and can therefore help diversify portfolios.
4.
Exchange-traded funds are a cost-effective choice for investors who _______.
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Use discount brokers, invest a large lump sum of money, and are willing to hold the investment for the long term. For others, an exchange-traded fund may not have a big cost advantage over a plain-vanilla, low-cost index fund.
5.
If you incur a lot of costs while investing in exchange-traded funds, those costs will most likely be _______.
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Brokerage commissions. Overhead is pretty low because the need for it is low. But you will need to pay brokerage commissions for buying and selling, and they will add up if you trade a lot.