Breaking out of the pack, the Gruntal & Co. investment firm has started marketing exchange-traded funds to its retail customers.

The funds, which have been quietly making their mark for two years, are mutual-fund-like baskets of securities that trade on exchanges like stocks.

Most exchange-traded funds track sectors or indexes, and none are actively managed. As a result, they have lower expense ratios and generate lower tax bills than actively managed funds. In addition, unlike mutual funds, exchange-traded funds reprice during the day, which makes them attractive to active traders.

Michael McGrath, managing director at New York-based Gruntal, said it is pitching the funds to investors with at least $250,000 of investable assets. These investors are usually sophisticated enough to move beyond index funds but may not have enough investable assets to pursue an all-stock strategy, Mr. McGrath said.

Though some analysts have been predicting a surge in business in exchange-traded funds, Gus Sauter, the lead manager of index funds at Vanguard Funds, said they have been used mostly by hedge funds managers.

So far, comparatively little interest has emerged on the retail level, he said.

Nonetheless, exchange-traded funds are steadily growing in assets. According to the Investment Company Institute, the mutual fund industry’s primary trade group, the funds accounted for $72.1 billion in assets at the end of January, up 10% from December.

Gruntal’s investors — who are often active traders — will use these funds as part of the asset allocation strategies that Gruntal advisers recommend.

Gruntal does not manufacture the funds and will not recommend any company’s fund over another, Mr. McGrath said. Instead, it provides a list of available exchange-traded funds and lets the investor choose.

The strategy reduces risk by avoiding individual stocks but still gives investors a chance to beat the market, he said. “Sometimes advisers are right on the sector but wrong on the stock,” he said.

Mr. McGrath also said that the next likely step in the evolution of exchange-traded funds — though one Gruntal is not taking — is putting together an extensive portfolio of the funds actively managed by an adviser and selling it through a wrap-type product.

Gruntal aims to avoid moving further until its investors become comfortable with the funds, Mr. McGrath said.

Some observers said it will be difficult to persuade mutual fund investors to embrace exchange-traded funds.

One of the biggest obstacles, said one, is advisers’ ignorance about the funds. Studies have shown that only about one-quarter of U.S. financial planners claim to understand how they work.

In addition, the funds do not provide investors with certain services — such as record keeping and annual reports — that mutual funds do, and that investors have come to expect.

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