Exchange traded funds have grown substantially in popularity over the past 10 years. By the end of 2018, there were 1,988 different offerings totaling $3.4 trillion in value in the U.S. alone. That represents a 330% increase in assets allocated to these investments and a 150% jump in the number of different ETF choices.
There are now nearly four times as many exchange traded funds as there are individual stocks in the S&P 500. Choice is good, but too much choice can be paralyzing, so the first step in building an ETF portfolio is to weed out all the distractions.
Exchange traded funds are similar to more familiar mutual funds, but differ in their creation and distribution. Mutual fund shares are created and redeemed by the fund company at the end of each day in response to purchase and sale requests.