Boasting competitive cost structures, enhanced tax efficiencies, and improved liquidity features, ETFs have quickly become one of the most popular tools for all types of investors. But despite the rapid rise of the industry over the last five years, there are still countless investors, including many financial advisors, who are completely unaware of exchange-traded funds. Even among those who are relatively well educated on the basics of ETFs, confusion on the nuances of these products can run rampant.

While the benefits and functions of ETFs are relatively simple to grasp, there are some complexities that have created confusion about these products. Below are a look at ten of the most common myths about ETF investing, along with some simple (and not-so-simple) truths.

If analysts ever had a true grip on the market, one might expect that their "Sell" ratings of stocks or ETFs would come near market highs. Similarly, one might expect that their "Buy" ratings would come closer to market lows. After all, the idea behind ratings is to buy lower and sell higher... isn't it?

However, stock and ETF ratings are notoriously late. First Call/Thomson Financial found that in the first 4 months of 2000, at the height of the previous bull market, less than 1% of stocks had a "Sell" rating by analysts.

Last Thursday, Ian Salisbury's "Fund Track" item in the Journal included the following nugget:

There are 721 ETFs with about $478 billion in assets, according to the Investment Company Institute, a trade group.

There's been a quote from Ron Lieber (not the actor) in a NY Times article making the rounds that I think is very constructive.

He says: Index (mostly). Save a ton. Reallocate infrequently.

Last week, PowerShares added to its lineup of strategy and fundamental ETFs with the rollout of two more funds based on the Dorsey, Wright & Associates Technical Leaders indexes and an international real estate ETF tracking a FTSE RAFI index.

PowerShares is going through a significant expansion of its strategy-oriented exchange-traded funds [ETFs]. Today, the firm launched the first of three ETFs based on the Chicago Board Options Exchange's BuyWrite indexes for the S&P 500, the NASDAQ-100 and the Dow Jones Industrial Average, and just a few days ago it announced its intention to launch another three ETFs, two of which are based on Technical Leaders indexes from Dorsey, Wright & Associates.

The PowerShares S&P BuyWrite Portfolio is based on the CBOE S&P 500 BuyWrite Index, which tracks the performance of a covered call strategy as applied to the S&P 500 Index. The strategy tends to outperform in down markets, but sacrifices some upside performance when the market is rising. It is often used to reduce volatility in a portfolio.