Investors need to follow best practices when trading ETFs, and perhaps the foremost among those guidelines is using limit orders, said Joel Dickson, global head of investment research and development at Vanguard.

"Vanguard recommends investors use limit orders, as opposed to market orders and sell stop orders, as a prudent way to safeguard against poor execution in times of market volatility," said Dickson.

Limit orders offer advantages for investors, providing price control and protection, as well as some trading flexibility. Dickson said the significant increase in volume after the market open on Aug. 24 was potentially exacerbated by clients' sell stop orders, which become market orders. They were likely triggered by volatile price action and wider spreads, which in turn created even more market orders.

Dickson said there is nothing new -- or inherently wrong with -- so-called "smart beta" strategies. He said they tend to be overhyped for what they really are, which is market-cap-weighted indices that have been reweighted to shift risk exposure away from market beta.

"Know what it is. Do the due diligence and then decide if it's a strategy you want in your portfolio," said Dickson.

When deciding between mutual funds and ETFs Dickson said the most important factors are investment strategy, trading flexibility, accessibility, and costs.

Mutual funds may be preferred by investors who want to use active strategies in their portfolio or those who prefer the trading convenience of mutual fund investing.

ETFs, on the other hand, may be preferred by investors who want a greater variety of index-based options or those who value the trading flexibility associated with trading on an exchange.

Costs must be weighed dynamically, in his opinion, owing to the trade-off between ongoing costs and transaction costs.

And while Vanguard is nearly synonymous with index investing, the fund giant has an exemptive application pending with the SEC that would permit it to offer actively managed ETFs.

"We just launched some active ETFs in Europe," said Dickson. "It's part of our overall approach to the ETF market."

Finally, when it comes to the safety of high-yield bond ETFs, another hot topic in ETFs, Dickson said junk bond ETFs have done a good job in representing their markets. In his view, the same rules apply to fixed-income ETFs as they do to stock ETFs.

"When you are trading these you need to be careful and use limit orders," said Dickson. "You need to know what sort of band in which the ETF will be valued."