Transcript for 'The Big Number': $2.45 Trillion Invested in ETFs
Okay. It is Monday April 7 the markets -- new -- open in today's big number 2.4 five trillion dollars that. Is how much money is invested worldwide. In some financial instruments known as ETFs exchange traded funds and they are at an all time high everyone down Cutler and New York so here's what it all -- -- Mike good morning Monday morning to you morning there -- -- -- what -- -- -- yet. -- very much like a mutual fund so it's a -- -- a wide variety of stocks or bonds usually. The difference between NE TF and a traditional mutual funds. Is that exchange traded funds trade like a stock on an exchange every day so every minute of the day you could you could trade in and out. Of these instruments they're only about twenty years old as a category. Some -- things -- in that period they've been received so well they've been growing. Pretty rapidly over that time to reach this nearly two and half trillion dollar number. So -- -- some of the selling points of NE TF over mutual fund why are they so attractive for investors. While it's it's sort of just because the mechanics of the fund and able they the fees to be extremely -- of the cost -- actually owning. One of these -- is is a fraction usually of a comparable mutual fund. And the fact you can trade in and out of it every day is an attractive element to -- it's not necessarily. The reason to own it but it definitely is better than having to wait till the end of the day for mutual fund and therefore. You know what you -- in real time all of these funds are based on usually defined. Index -- to -- sector so that every day you could know exactly what's. In that fund at all times the final selling points a little more complicated but they're they're very tax efficient they don't usually give you. Kind of a big tax surprise the end of the year you gonna owe money on as a mutual -- sometimes can't. -- for your everyday investor to something like this a more attractive than say individual stocks -- that might carry more of an individual risk. I do think for most investors by far ETFs -- the better option just to get. General exposure to the financial markets to stocks and bonds either broadly or even through individual sectors some of them are very specialized that you know let's say it would be a green energy -- -- something like that but I do think it makes a lot of sense simply because of that low cost -- over a long period of time. As a small investor the big swing factor in whether you know you actually build a nest egg is often. That cost level you're paying out every year so if you can just get. The exposure get the returns the market is giving. To you and not have to pay much for it it's actually -- pretty big win. And yet at the same time it is always important as were always told and reminded to do your homework before gonna arrive and anything that's right I mean is yes black that is this is diversified. And -- spread out at the same time though there is always some degree of risk. Oh without a doubt and yet the ATF itself is not going to save you from a big broad loss in the overall markets and also. You know you can get a little bit too -- here with some of the very specialized. That seem a little gimmicky like that green energy ETF perhaps that I mentioned the other day she shouldn't really try to get to targeted about it it should mostly be about getting. You know broad exposure to the markets and not really trying to to work too hard to. To try to beat the overall markets which usually -- -- -- game for individuals. Aren't words of advice for a -- -- not -- -- my thanks for joining us appreciate it of course you. You can always keep up with latest headlines right here on abcnews.com you've been watching the big number -- -- Cutler in New York.
This transcript has been automatically generated and may not be 100% accurate.