Exchange traded funds (ETFs) are one of the fastest growing segments of the investment industry and have opened a broad range of opportunities for individual and institutional investors. The underlying advantage of ETFs is that they trade on an exchange, which offers investors greater flexibility and more liquidity than mutual funds. ETFs originally developed as passively managed portfolios designed to offer broadly diversified portfolios with low tracking error and at low cost. As such, plan sponsors increasingly have considered ETFs viable vehicles for the ‘core’ portion of an investment fund, as well as a means to manage cash flows or for transition management. The industry more recently has seen the growth in less traditional ETFs that offer investments in particular styles, sectors, industries, countries, or commodities. These typically incur greater cost and higher tracking error. While the newer ETFs offer an abundance of innovative choices for the investor, their usage essentially reflects more of an active strategy than a true indexed investment.