NEW YORK (MainStreet) — The rise in the number of exchange-traded funds (ETFs) being launched are giving investors more options to diversify their retirement portfolios.

Many investors are purchasing ETFs, because they tend to have lower, transparent expenses and are tax efficient, said Kevin Kelly, chief investment officer of Recon Capital Partners, a Greenwich, Conn. registered investment advisory. Today, the company launched its new ETF, the FTSE 100 ETF, the only U.S.-listed ETF benchmarked to the FTSE 100. The ETF, listed on the Nasdaq, gives investors exposure to the FTSE 100, an index which consists of the 100 companies with the highest market capitalization listed on the London Stock Exchange, including Barclays, GlaxoSmithKline, HSBC, Burberry and Rolls-Royce.

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“The FTSE 100 ETF offers investors direct access to a premier index where they are not required to set up custodian fees and don’t have to worry about trading costs,” Kelly said. “They can also get exposure during U..S hours in U.S.dollars.”

ETFs can also help investors diversify their portfolios easily, since buying different asset classes is simple, Kelly said.

“You can own gold, real estate or emerging market debt all in one click,” he said.

The rise in the popularity of ETFs are occurrin,g because investors are drawn to their lower fees and portability.

Although ETFs have been around since 1993, their attractiveness has soared in the past few years as more 401(k) and IRA plans are offering them as an option. A decade ago, the total amount of funds in ETFs totaled $200 billion, and investors could only chose from a few dozen options, said Wayne Connors, a managing partner of Retirement Investor, a Glastonbury, Conn. company which allows investors to build their own IRA portfolios.

ETFs are an “advantageous way” to invest for retirement, since the fees are much lower than traditional mutual funds and trade like a stock by tracking an index, such as a commodity or a group of assets, he said. Assets in ETFs now exceed $1.7 trillion and there are over 1,500 ETFs for investors to choose from.

The Tuttle Tactical Management U.S. Core (Symbol: TUTT), which was launched on February 24, is a “fully tactical ETF of ETFs and is the largest of its kind,” said Matthew Tuttle, CEO of Tuttle Tactical Management in Stamford, Conn. This ETF operates under the premise that markets exist in one of four states - times when it makes sense to be completely out of the market, when it makes sense to be partially invested, when it makes sense to be fully invested and when it makes sense to "back up the truck," he said.

“TUTT allows investors the possibility of being able to ride the market up during a bull market without having to ride it down during a bear market,” Tuttle said.

Invest In Sectors to Diversify

Similar to investing in mutual funds, investors can dip a toe into a sector by purchasing an ETF comprised of companies in that industry with less risk than buying individual stocks.

Two ETFs that were launched in December 2014, BioShares Biotechnology Clinical Trials ETF (BBC) and BioShares Biotechnology Products ETF (BBP), offer access to companies in the clinical stage and those in the commercialized products space.

Many investors shy away from the biotechnology sector, because they believe they lack the expertise to evaluate stocks in the industry but miss out on the strong returns generated by them, said Paul Yook, a portfolio manager of New York-based BioShares Biotechnology Funds.

“Single stock picking in biotechnology, while thrilling, can be difficult for individual investors due to the potential volatility,” he said. “Single stocks can fall as much as 80% on the failure of a clinical trial, but can also rise dramatically in the event of positive clinical results. Passively managed, index-based biotechnology ETFs provide an ideal investment alternative to gain exposure to the biotechnology space.”

BBC invests in clinical trial stage biotech companies and is comprised of 68 holdings. These high volatility stocks in this fund include Auspex (ASPX), ZIOPHARM (ZIOP), Esperion (ESPR) and Cempra Holdings (CEMP). BBP invests in biotech companies with FDA-approved products on the market and is comprised of 35 holdings. These companies typically have a larger market cap and experience less volatility with holding such as Exelixis (EXEL), Halozyme (HALO), Pharmacyclics (PCYC) and Hyperion (HPTX).

Biotechnology is the highest growth segment and in 2014, the average biotechnology ETF increased by 38% and over the past five years, rose by 33% annualized, Yook said.

“In 2014, a record 41 biotechnology drugs were approved by the FDA and many companies set record sales for drug launches for diseases such as multiple sclerosis, hepatitis C and a variety of cancers,” he said.

ETFs are popular for many reasons, but many Main Street investors like them as a tool for rebalancing their 401(k)s and IRAs, said Charles Sizemore, chief investment officer at Sizemore Capital in Dallas and a portfolio manager on Covestor, the online investing marketplace.

--Written by Ellen Chang for MainStreet