He followed adviser Keith Maier's suggestion and put some of the money into an exchange traded fund — a little known investment vehicle that functions a lot like an index fund.

Six years and one major mutual fund scandal later, exchange traded funds are getting favorable publicity. An exchange traded fund offers the diversity of a basket of stocks. It is a first cousin to an index mutual fund, but it offers some advantages that mutuals don't:

• Since they are traded like stocks, ETFs can be bought and sold throughout the day unlike mutual funds.

"Mutual funds, by and large, you can only trade once a day," said Sean Clark, chief investment officer for Clark Capital Management, a Philadelphia investment advisory firm that works with high-worth individuals. "If you know you want to sell your mutual fund at 10:30 in the morning and you place that order, it's not being sold until 4 p.m. But with ETFs, they trade just like a security because they are securities. They trade on an exchange, every day and all day long."

• ETFs carry a low annual expense that compares quite nicely to even the cheapest mutuals.

• They can be traded on margin or sold short.

• In a taxable account, they are likely to offer tax advantages.

On the downside, ETFs might trade slightly higher than index funds because the ETFs don't necessarily trade at net asset value. For example, the Dow Jones Industrial average increased in value by 11.7 percent in the year ended Dec. 1, 2003, but the cost of the Diamonds Trust Series 1 ETF, which mimics the Dow, was higher by 11.5 percent. During that same period, the Standard and Poor's 500 Index (up 14.5 percent) slightly outperformed the SPDR Trust Series 1 ETF (up 14.3 percent).

Also, the higher in-and-out commissions likely will make ETFs a poorer choice than no-load mutuals for the investor who uses the dollar-cost-averaging strategy, advisers said.

But on balance, Maier, who heads the Maier Group in Pittsford, N.Y., and many other advisers call ETFs a sound component in a balanced portfolio.

"There are so many options available," Maier said. "You get instant diversification, very low cost, they are very easy to trade and they are transparent. To me there aren't any negatives. I'm using them now as much as I have, basically for the core of the portfolio."

Maier said he has been using ETFs for about six years. One of the early clients he put into them was Robins, who now sells and repairs personal computers.

Robins knew nothing about ETFs at the time.

However, the ETFs built up Robins' retirement portfolio nicely through the late 1990s. Then, he says, he made a bold move on his own.

"I'm not an expert by any means on investing," he said. "I don't claim to be. It bores me. My eyes glaze over. But just before the dot-com crash, I called Keith on the phone and said, 'Sell everything. Put it in bonds.' And that's what we did."

Through the bear market, Robins was making money while others were losing. Now he and Maier have begun to pump money back into equities, including ETFs.

"Certainly when properly used, they are an excellent vehicle for reducing costs and building an asset allocation portfolio," said Keith Condemi, a chartered financial analyst with Equimark. "They offer many asset classes, such as real estate, that do not exist in a quote-unquote index fund environment."