Exchange Traded Funds have been around for years but over the last three or four they have begun to gain the average investor's interest. The attraction is lower cost but that is mostly an illusion. ETFs may have lower expenses but many people replace that cost and then some with the commission costs charged by the brokers who sell these funds, which are essentially stock.

I say essentially for a reason. They are primarily traded on the American Stock Exchange and are basically a basket of securities (stocks issued by companies) that follow an index. Vanguard and Fidelity have entered the market recently with ETFs following Merrill Lynch and Barclays who have been using these types of passive funds for years.

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