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Hot Stuff The mercury's rising on exchange-traded funds.

By Dian Vujovich

Opinions expressed by Entrepreneur contributors are their own.

Exchange-traded funds, or ETFs, are hot. Around for almost 15years, these index-like investments have finally caught on likewildfire with investors, and for good reason: They trade likestocks, are inexpensive to own and offer plenty of choicesrequiring no long-term investment commitment.

Each ETF represents a basket of securities: Some are broad-basedand index-related, like the popular Nasdaq-100 Index ETF; othersare country-, industry- or sector-specific, such as Vanguard'sEnergy VIPERS. ETFs may be used as core investment holdings; forportfolio diversification; for hedging; or for cash management,rebalancing or tax-loss strategies. Plus, annual expenses are onlyabout 25 basis points a year (or 0.25 percent).

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