ETFs Can Do It All

Exchange-traded funds are easy to trade and offer you an affordable way to build a diversified portfolio.

Invented only about two decades ago, exchange-traded funds should be part of every serious investor's portfolio. In fact, a diversified batch of well-chosen ETFs can make up your entire portfolio.

The growth of ETFs has been breathtaking. In January 2009, there were 856 ETFs and exchange-traded notes (which I'll discuss below). By the end of March, the number had jumped to 1,173 -- a gain of 37% in little more than two years. Assets under management now top $1 trillion.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.