The rise in popularity of exchange-traded funds among brokerages, some of which have built entire portfolios out of them, is a departure from years of shying away from index funds. ETFs, which are index funds that trade like a stock, have been pitched by Bank of America, Citigroup's Smith Barney unit, Wachovia Corp. and Merrill Lynch & Co. "Before ETFs, the way to buy indexes was through a no-load mutual fund," said Marc Brookman, director of product management at Smith Barney. "We didn't have a great way to integrate passive investments into a brokerage account."

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