advantages and disadvantages of EFT

Advantages 
There are numerous advantages of mutual funds and ETFs. Below are a few: Diversification One ETF can give exposure to a group of equities, market segments or styles. In comparison to a stock, the ETF can track a broader range of stocks, or even attempt to mimic the returns of a country or a group of countries. For example, you could focus on Brazil, Russia, India and China in a BRIC ETF. Mutual funds can be diversified as well, but the ETF has lower fees and trades more like an equity investment. Lower Fees Compared to Managed Funds ETFs, which are passively managed, have much lower expense ratios compared to other managed funds. A mutual fund's expense ratio is usually higher due to costs such as: a management fee, shareholder accounting expenses at the fund level, service fees like marketing, paying a board of directors, and load fees for sale and distribution. Trades Like a Stock Although the ETF might give the holder the benefits of diversification, it still trades like a stock. 

Disadvantages
May Be Limited to Larger Companies In some countries, investors might be limited to large-cap stocks due to a narrow group of stocks in the market index. Only including larger stocks will limit the available exposure to mid- and small-cap companies. This could leave potential growth opportunities out of the reach of ETF investors. Intraday Pricing Might Be Overkill Longer-term investors could have a time horizon of 10 to 15 years, so they may not benefit from the intraday pricing changes. Some investors may trade more due to these lagged swings in hourly price. A high swing over a couple hours could induce a trade where pricing at the end of the day could keep irrational fears from distorting an investment objective. Bid-Ask Spread Can Be Large As more niche ETFs are created you might actually find an investment in a low volume index. This could result in a high bid/ask spread. You might find a better price investing in the actual stocks (usually large institutional investors) or maybe even a managed fund.