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Investing Specialists

Traditional Index Fund vs. ETF Cage Match

How do the two vehicles stack up when it comes to costs, trading capabilities, taxes, and other features?

This article is part of Morningstar's Guide to Passive Investing special report.

Exchange-traded funds have garnered much of the buzz--and new assets--in the mutual fund industry over the past decade. But at heart, they're not a whole lot different from traditional index funds, which have been around since the 1970s. Most traditional index funds and ETFs track some type of benchmark, offering investors exposure to a market segment in a convenient package. Low costs and good tax efficiency are also hallmarks of many ETFs and index funds.