The advantages of ETFs include liquidity, transparency, easier asset allocation, lower costs as compared to mutual funds and tax advantages. One concern voiced about ETFs is that they can trade at a premium or discount to their Net Asset Value—similar to closed-end funds where the number of outstanding share is constant. The big difference between closed-end funds and ETFs is that holders of ETF shares may redeem them for underlying assets whereas holders of closed-end funds have no way to redeem their shares for the underlying holdings.
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