ETFs must be purchased through a broker, and a brokerage commission must be paid when you buy shares of an ETF. An investor trading in and out of an ETF will incur trading costs, which can make ETFs less suited to systematic investing programs such as dollar cost averaging, and reduce or eliminate any cost efficiencies.
While an ETF offers a less expensive way to diversify among many securities, remember that an individual ETF tends to be comprised of securities in a given asset class, which may share similar behavior. ETFs can be combined with other ETFs and other types of investments to create a broadly diversified portfolio.
An ETF doesn’t necessarily trade at its net asset value, and bid-ask spreads may be wide for thinly traded issues or in volatile markets.