ETFs are designed to follow a certain index, and not to go above it. This means that ETF requires only minor adjustments, as opposed to a managed fund which looks to higher returns compared to the underlying assets. As a result, risk and management fees for ETFs are usually lower compared to other assets, meaning that investors incur in lower operational costs compared to what they might spend when investing in other types of assets such as bonds. Simplicity with Investment Procedures ETFs come with a very simple structure that is easy to understand. If an investor wants to invest money in a particular industry or sector, or they want to emulate Returns on Investments (ROI) from a particular stock index, an ETF provides a more convenient way of investing. For instance, if an investor wants to invest in tech stock, he will simply follow a tech index that provides the overall industry outlook. Tax Efficiency ETF investors are allowed to delay incurring capital tax gains when the dealer is disposing of the shares. This is contrary to mutual funds which incur in taxes with much greater frequency as a result of the increased trading activities. Derivatives Most ETFs come with options and future contracts, which are exceptional tools for portfolio risk management. Therefore, if an investor wants to hedge their ETFs with calls and puts option, there are always funds that readily come with such flexibilities. Enhanced Accountability of the Assets The personnel in charge of developing the ETF must always publish lists of assets from the fund on a daily basis. This is known to encourage transparency with the funds.