The End of Mutual Funds?

I came across an interesting article on CNBC which discusses the advantages of ETFs and how the investment advisor community is starting to embrace them. ETF stands for Exchange Traded Fund which are baskets of stocks that mimic an index.  They were originally created for instituational investors to trade large block of the market instead of buying hundreds of stocks by entering hundreds of trades.  One of the most popular is SDPR S&P 500 ETF ticker symbol SPY.  As you guess this ETF mimics the S&P 500.

There are plenty of advantages ETFs have over mutual funds.   I won't go through all of them in detail but the most common are lower fees, tax efficiency, intra day trading, easy access to normally illiquid asset classes and great for building diversified portfolios.  Please watch the video that discusses what makes and ETF (ETF Explained) and read the CNBC article about passive vs active or ETF vs mutual fund (ETF unfinished business in 2014: Crushing the mutual fund).