In particular, almost all ETFs are index funds, which means they have very low expense ratios.
Many of the benefits of an ETF are also benefits of an index fund. And, in fact, in some cases the ETF is the same fund as an index fund. For example, VTI, the Vanguard total stock market ETF is the same fund as VTSAX, the Vanguard Total Stock Market index fund. The main difference is in how and when you can purchase or sell shares of the fund.
Also, the index fund may have a minimum initial investment of several thousand dollars but no transaction fee for making a purchase, whereas the ETF may have no minimum investment but may incur a small transaction fee for each purchase. In the case of the aforementioned Vanguard total stock market fund, the ETF and conventional index funds are simply two different share classes of the same fund.
In some cases, ETFs handle capital gains and dividends differently - they may automatically re-invest dividends and capital gains whereas with the conventional index fund you have the option to re-invest them or collect them as cash. This may affect when and how you pay taxes on those dividends and capital gains. But since index funds tend to be very tax efficient anyway, they tend to pay very little in capital gains so this has little practical effect for most investors. It has no effect for those holding the fund in a tax sheltered account such as a 401k or an IRA.
Bottom line: a lot of the hoopla over ETFs is just marketing hype. The main benefit for most people is that you can buy very small amounts of best ETFS for 2021 in your initial purchase and you can buy them or sell them any time of the day whereas you buy and sell index funds at the end of the trading day.
