Easy Diversity
This may well be the single-biggest upside of ETFs. The idea of 'safety in numbers' applies to investment portfolios as well. An exchange-traded fund is by definition a collection of several (if not hundreds) of related stocks, so owning one ETF is the same as owning a small stake in each of those companies...without the mess of owning dozens of equities.
There are two basic ways ETFs can offer diversity.
First, if an investor simply wanted to mirror the market's overall performance, an index-based exchange-traded fund would do the job. This idea is attractive to investors who don't have the time or inclination to try and 'beat' the market by picking the next strong stocks or sectors.
Second, if an investor believes a portfolio's sector allocation or style allocation is imbalanced, there's not necessarily a need to try and pick a particular stock from the missing or lacking group. There's most likely an ETF that mirrors the group as a whole.
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