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2020 was a great year for ETFs, with inflows exceeding $500 billion, while mutual funds lost about $362 billion, per Bloomberg data. Investors prefer ETFs now as they are generally more tax-efficient, cheaper, and easier to trade.

Some fund providers have started converting their mutual funds into ETFs. We discuss why ETFs are so tax-efficient and ETF due diligence.

Elisabeth’s favorite ETFs for long term investing are Vanguard Total Stock Market ETF (VTI - Free Report), Vanguard Total International Stock ETF (VXUS - Free Report), Vanguard Total World Stock ETF (VT - Free Report), iShares Core U.S. Aggregate Bond ETF (AGG - Free Report) and Vanguard Total International Bond ETF (BNDX - Free Report).

The Invesco QQQ ETF (QQQ - Free Report) and its cheaper version Invesco NASDAQ 100 ETF (QQQM - Free Report) hold many highly innovative companies. Apple (AAPL - Free Report), Microsoft (MSFT - Free Report), Amazon (AMZN - Free Report), and Tesla (TSLA - Free Report) are the top holdings in these funds. I believe they also deserve a place in the portfolio.

Cathie Wood’s new ARK Space Exploration & Innovation ETF ARKX ARKX is on track to be one of the most successful ETF launches ever as it gathered more than $500 million within a week of its debut. Investors have poured more than $300 million into the VanEck Vectors Social Sentiment ETF (BUZZ - Free Report), which was promoted by Dave Portnoy. Should investors consider these “hot” new ETFs?