Exchange-Traded Funds are the newest type of fund. They only started making them in the 90s when a demand for inexpensive index funds was emerging in the broker's market. These funds allow for extra liquidity and protection for investors that do their own trading and offer extremely low-fees for people adding them passively to their portfolio.

Advantages

  • Low-Fees are definitely the main advantage
  • Far more transparent when it comes to fees and the value of the securities inside the fund
  • Since all the funds are on the exchange it's easier to mix funds between different investment firms
  • ETFs have a low conflict of interest for investors as most do not pay the advisor directly.
  • Niche funds for people looking for a Specific investment

Disadvantages

  • You have to use a brokerage to invest in ETFs
  • Most ETFs do not have a long history of returns, making it difficult to judge active ETFs
  • Since ETFs are still new and have a lot of competition between each other, there will most likely still be a period where funds are being discontinued.