ETFs, like mutual funds, are considered a simple way to get a good mix of investments for the dollar. For some investors the perceived risk of owning shares in an ETF is lower than owning shares in a mutual fund because the ETF tracks an index, which requires far less management and decision-making on the part of the fund manager.

Many investors buy and hold their shares in ETFs for a long time. Equity ETFs follow stock indexes, and while stocks over time have proven a successful long-term investment vehicle for most investors, market volatility may mean that it takes some time for the value in a particular stock to recover after a downturn.

ETFs are a great way to reduce investing costs while providing a wide mix of investments the individual investor does not have to watch each day. ETFs are also a low cost entry into building a portfolio of investments by a particular type or market sector. ETF distributions, however, can be problematic for the investor who doesn't like to track them or figure out how to reinvest them, so in some cases a mutual fund is a better option.