A. We have showed that ETFs have 3 major advantages over mutual funds, even index funds. In addition, there are thousands of ETFs available for investors to choose, the underlying indexes they track range from all major stock market indexes to emerging markets and high yield bonds to specific sectors. In other words, it is entirely possible to build one's portfolio with ETFs only.
The best strategy is probably to build one's core portfolio with ETFs. However, for the bonds in the portfolio, ETFs might not be the best choice, as bond indexers have more trouble than stock indexers matching a benchmark because the bond market consists of millions of issues, while the stock market only has thousands of issues. Again, this goes back to the disadvantages of ETFs we discussed before - some ETFs are not widely traded and has poor benchmark trackings.
In our next blog post, we will discuss how do you choose among different ETFs.