Exchange-traded funds are one of the most popular investments for financial advisors, but what makes them a better choice than other options?1. Liquidity If an advisor wants the ability to quickly react to market changes, they can buy and sell ETFs much faster than shares of a mutual fund with a three-day settlement process. Advisors can also trade options on many ETFs, which allows them to hedge their clients’ positions. 2. Affordability Traditional open-ended funds may charge a sales load, but ETF transaction costs are typically much lower. ETFs also often come with smaller annual expense ratios than traditional open-ended funds. 3. Tax Efficiency ETFs rarely pass internal capital gains distributions to their clients, so there are no tax consequences for simply owning them. This gives advisors more control over their clients’ capital gains. 4. Complete Market Coverage Advisors also like ETFs because they cover nearly all areas in the market that are also covered by traditional open-ended funds. This provides clients with broader diversification.