Exchange-traded funds have made for some ugly headlines. They played an integral role in the May 6 flash crash, and more recently a controversy erupted over whether prices could crash on heavily shorted ETFs. Though many consider those fears unfounded, these increasingly popular investments nonetheless pose risks, and financial advisers should be cautious.
A lot of factors make ETFs attractive. They're usually much less expensive and more tax-efficient than mutual funds. And they're as easy to buy and sell as stocks, which appeals to fee-based advisers.
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