Why investors turn to ETFs during times of market stress

Published On Aug 31, 2024, 3:04 PM

During times of market stress, investors are increasingly turning to exchange-traded funds (ETFs) due to their liquidity, diversification, and lower fees compared to traditional mutual funds. ETFs allow investors to quickly shift investments without the burden of high transaction costs that typically arise in less liquid markets. Furthermore, as uncertainty heightens, having a diversified portfolio becomes even more vital, making ETFs appealing since they offer exposure to a broad range of assets or sectors with one investment, thus reducing individual stock risk.