From The Archives: The Pros And Cons Of ETFs?

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Judging by a number of e-mails I received last week, some readers are still confused about how ETFs work and what their pros and cons are. While many articles have been written on the subject, including one I wrote a few years ago, here’s one I found that may help increase your knowledge.

Among other things, it also talks about how ETFs are created and addresses some of their tax-efficiencies as opposed to mutual funds.

However, I must caution you that you should not hold on to an ETF, or any investment for that matter, for only tax reasons. The money you might save could be more than offset by a trend reversal which has the power to do some severe damage to your portfolio.

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