"My clients don't feel like sitting ducks," she added. "If the market drops, they don't want to have to wait until 4 o'clock to sell a mutual fund. ETFs avoid that problem." Swanger also likes that ETFs offer the ability to use stop loss and limit orders, which mutual funds don't offer.
Like many advisors, Swanger uses traditional, broad-based ETFs for the core of her clients' portfolios. She then includes smaller positions in various sector ETFs that she buys when the opportunity presents itself.
The goal of her strategy is to achieve high growth or dividend potential, depending on her clients' needs. By using ETFs in this way, she said, "you're not just passive investing — you're actively managing a portfolio for the best interests of the clients."
Gagliardi, at Coromandel Wealth Management, uses ETFs in a similar manner, starting with a few core holdings to get exposure to U.S. and non-U.S. large caps and then supplementing with various ETFs that offer exposure to certain sectors, countries and commodities. He also uses actively managed bond and currency-hedged ETFs.