What would likely prompt a company to choose an ETF over mutual funds?

Choosing an exchange-traded fund (ETF) over mutual funds is often driven by the preference for diversified investment exposure. ETFs typically hold a collection of securities, which allows investors to gain immediate diversification across various assets without needing to buy each security individually. This diversification can reduce risk and is particularly appealing to those looking to invest in a broad market index or a specific sector without actively managing their investments.

In contrast, mutual funds may also offer diversified investment opportunities, but they often come with higher fees, limited trading flexibility, and potential tax implications. Since ETFs are traded on exchanges like stocks, they provide instant liquidity and can be bought and sold throughout the trading day at market prices, making them more attractive for investors who appreciate real-time trading and market-driven pricing.

Exploring the other options highlights differences in financial strategies and needs. For instance, a desire for higher fees may not align with the cost-effective nature of ETFs, which generally have lower expense ratios compared to mutual funds. Additionally, a need for less liquidity is contrary to the inherent benefits of ETFs, which typically provide more liquidity. Lastly, while investing in one specific company does not typically necessitate a diversified approach like that offered by ETFs, it aligns more with individual stock purchases rather than the objective of selecting