Any real advantage of an ETF over an index fund (annuity, bonds)

[TMBGBlueCanary]

I am getting set to move some money out of an annuity (two actually a Roth and a Traditional annuity) into some other sort of fund. Right now, I have a Roth index fund (S&P index) and a Traditional IRA (total stock market index) set up for the transfer. But I am also looking at ETFs, specially a mid-cap fund (US equities), a large cap (also US equities), and/or an international ETF (based on the FTSE).

From what I can gather, it they seem similar except that the ETFs have lower costs than the index funds and more flexibility (they don't have to match the index from what I can see). There are tax advantages too with capital gains, but I have to admit I am not sure how that effects retirement accounts. There is an advantage with trading too, but honestly, for my retirement accounts, I tend to passively invest (buy and hold). I am also contributing monthly to the Roth.

It almost seems like a bit of a wash to me except the fees with the ETFs I am looking at are lower.

If I don't go with the ETFs, I am seriously considering changing one of the other funds (or splitting it) and looking into international index funds as well.

My question, am I over looking something? Is there any advantages (or disadvantages) I am missing?

[Keim]

One addition: ETFs can be traded throughout the day at that moments value, they aren't limited to end of day valuation. Otherwise I think you covered it.

[mathjak107]

etf's can be sold short .

bond etf's can have a pretty wife spread between discount and premium unlike a stock etf.

bond etf's can be more volatile because of the short selling.

[MLSFan]

I don't think you understand what an ETF is... or an index....

the F in ETF stands for fund, it could be any fund... including index funds...

I like index etfs like VT, VTI, VXUS... you could have real estate etf, utility etf, gold etf, porn etf too...

are you confusing index with a mutual fund?

[TMBGBlueCanary]

Thanks for the info so far. I am trying to wrap my head around most of this and it seems like a lot of what ETFs offer really isn't applicable for me (I won't be trading often and I won't be short selling). But I still like the lower fees associated with them. It's good to know about the short selling. I won't be getting bonds though as I think of my annuities as "bond-like" funds.

To answer eyeb's question, I don't think I am confusing them, but I might be as they seem similar. Maybe because I am comparing index funds to ETFs.

I currently have index mutual funds (and they are listed under the mutual fund area of the Schwab website). The ticker symbols are SWPPX and SWTSX if that helps. SWPPT is based on the S&P and the SWTSX is a total stock market fund.

I am trying to learn about ETFs and have found some (again) on the Schwab website. I can trade those for free on Schwab, but I can also get other ETFs that aren't Schwab specific. There is a fee associated with buying and selling those, but since I only plan to buy a large lump sum as I move over 10% each year from an annuity, I am not so concerned about the small fee (think it's about $8).

I may still consider a Schwab ETF simply because I would like to add to it each month (and then I would care about that $8 fee more).

The ETFs I am looking at are SCHM, SCHF, and SCHC and maybe SCHE (yes, all Schwab for now. I thought about Vanguard's VDE and VONE too, but I stalled out on my research today. Reached a point where I didn't want to think anymore about money).

[hyuk17]

ETF's are index funds. Yes go with ETF's/index funds. Stay away from actively managed funds because they are expensive.