ETFs are exchange-traded funds -- an increasingly popular type of mutual fund with shares that trade like corporate stock. Their value reflects holdings that mirror an index, such as the S&P 500. IndexFunds.com has compiled a useful introduction to ETFs, which covers both the pros and the cons of investing in them. (To reach it, click on "FAQ" in the "ETF Zone" category.)
    Pros: Some advantages of ETFs that are relevant to long-term investors are diversification, tax efficiency and low expense ratios. Less relevant for long-term investors (and ways that they're different from traditional mutual funds) -- an investor will owe capital gains on them only after selling ETF shares, can buy or sell them at any time during a trading day, and can sell "short," betting that their price will go down.
     Cons: They're bought and sold through stock brokers, so investors must pay commissions. Also, many are based on narrowly focused stock indexes, so investing in them can be less about diversification than about betting that a particular sector will thrive.
     For more information, go to Bloomberg.com and click on "ETF Menu" for comparisons of the most popular ETFs. Or visit SmartMoney.com and search for "ETF."