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ETFs have other appealing characteristics. In particular, investors can trade ETFs at different prices throughout the day, as with individual stocks but unlike mutual funds. Nearly all mutual funds are priced just once a day, at the close of the market session.

Steve Barnes of Barnes Investment Advisory in Phoenix said he uses ETFs more than mutual funds. “The costs are extremely low, and the liquidity is good,” he said.

But because ETFs sell at different prices each day, “You have to watch the trading more,” Barnes said.

Conversely, Kathleen Murray of Dynamic Wealth Advisors in Phoenix said she favors low-cost mutual funds, though she likes one ETF called Swan Defined Risk, which invests in S&P 500 stocks but uses put options to guard against large downside swings. “It’s designed mostly to protect against severe market drops,” she said.

With $11.6 trillion in assets, mutual funds still remain substantially larger than ETFs.

Another difference between the two involves trading costs. When buying or selling an ETF, you pay a standard brokerage commission, as with individual stocks. But there are no sales charges or “loads” to beware of, unlike with many mutual funds.

In the past two decades, ETFs have come to occupy all sorts of niches, providing exposure to assets and markets once off-limits to small investors, such as commodities and currencies. To the extent these other areas offer greater performance and diversification potential, investors have more arrows in their quivers.

The flip side is that ETFs can be complicated. It’s important to understand what you own, especially if you’re using a fund that employs leverage to magnify gains, which can also result in outsize losses.

“Education is probably the biggest challenge for getting people to use them more,” said Deborah Fuhr, a partner at British investment-research firm ETFGI and another speaker at the Phoenix conference.