The Most Over- and Undersold Benefits of ETFs
ETFs have huge benefits for investors, they just might not be the ones you think.
As an investment wrapper, exchange-traded funds have several beneficial characteristics. But I would argue that some have been oversold--made out to be more significant than they are. Others have been undersold--not given their due. In both cases, I think there is some mischaracterization of the benefits, missing context, or some combination of the two. Here, I will stand them up and knock them down, one by one.
Oversold: ETFs' liquidity--the ability to trade them just like stocks, during normal market hours. I think liquidity is oversold for two reasons. First, I think this framing is overly narrow. Second, I think that intraday liquidity could tempt investors to trade more often.