Exchanged traded funds are the 21st century investment product of choice for the inexperienced trader all the way to the professional money managers, but in a market full of computerized and day trading, is there any place for the buy and hold investor in the ETF world? There is and we've highlighted a few ETFs that are worth your research time. (For more, read An Inside Look At ETF Construction.)

TUTORIAL: Exchange-Traded Funds

iShares iBoxx $ Investment Grade Corporate Bond Fund
Every portfolio should have a diversified asset mix that includes stocks, bonds and possibly other products. The iShares iBoxx $ Investment Grade Corporate Bond Fund (Nasdaq:LQD) is a fixed income ETF that invests in all of those companies that make us feel safe. Big, stable companies like AT&T (NYSE:T), Walmart (NYSE:WMT), JP Morgan Chase (NYSE:JPM) and General Electric (NYSE:GE) are some of the fund's top holdings. With a low expense ratio of 0.15% and a yield of nearly 4%, this is a perfect choice for a long term holding.

Vanguard Total Stock Market ETF
Possibly the biggest advantage of ETFs is their ability to diversify your portfolio with one purchase. The Vanguard Total Stock Market ETF (Nasdaq:VTI) may just be the ultimate diversifier. This ETF invests in more than 3,000 stocks, to give you exposure to the total stock market index and you don't have to pay much to invest. The fund has an expense ratio of 0.07%, lower than 94% of similar funds, according to Vanguard. You get paid a 2% dividend to hold it and rather than trying to beat the market, you can track its performance.

You have probably heard that you should have international exposure in your portfolio. That is a subject of much debate among managers, but the Vanguard MSCI EAFE ETF (Nasdaq:VEA) is one way to get it. This ETF seeks to track the performance of the MSCI EAFE index, an index that tracks the stock market performance of developed countries other than the United States and Canada. It is a Vanguard fund, therefore, its expenses are low and it has an attractive yield. (For more on international funds, check out Go International With Foreign Index Funds.)

Market Vectors Long Municipal Index ETF
Municipal bonds have the benefit of being free of federal, and sometimes state and local, taxes. ETFs made up of munis are a tax efficient portfolio holding appropriate for all investors. The Market Vectors Long Municipal Index ETF (Nasdaq:MLN) tracks the performance of the Barclays Capital AMT-Free Long Continuous Municipal index, an index made up of long dated municipal bonds. The expense ratio is only 0.24% and in 2011 it saw double-digit returns.

You might wonder why we don't include commodities ETFs, such as the United States Oil Fund (Nasdaq:USO). Commodity ETFs don't perform well over long periods of time, because these funds purchase futures contracts and later have to sell them to avoid taking delivery of the commodity. They may go through sustained periods where the price of the contract they buy is more expensive than the contract they sell. This is called contango and it can cause the fund to lose large sums of money over time. As a general rule, long term investors should not invest in commodity ETFs.

The Bottom Line
You may end up reading this article years after it was written, and for that reason, and many others, you should never commit your money to a stock or ETF that was recommended by somebody who doesn't know you. If these ETFs sound appealing, get started on your research and make sure they are the right fit for your risk tolerance and portfolio. (For more on choosing the right investments for your portfolio, check out 4 Steps To Picking A Stock.)

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