I get asked a lot of questions about ETFs - from readers, from friends, from my own father.

(The following is excerpted from my opening remarks today at the IQPC conference in San Francisco, California.)

I get asked a lot of questions about ETFs - from readers, from friends, from my own father. And the question I get asked more than any other is this: What do ETFs really bring to the table?

You see people answer this all the time - in the press, on CNBC, in research papers - and for the most part, the answers are wrong.

The first thing people reach for when they answer this question is low costs. People love to talk about ETFs' low costs. And it's true that ETFs are cheaper, on average, than competing mutual funds.

But the truth is that you can get even lower costs with different share classes at Vanguard, so it's not really all about costs.

People also love to talk about transparency, and transparency is important - no style drift, no hidden skeletons, no surprises. But many other index funds reliably adhere to their index, and while transparency is a plus, I don't think it really explains why people are buying ETFs.

People also talk about the "excitement" of investing in ETFs, as if buying the S&P 500 SPDR were a thrill a minute. And this is an exciting industry. But you and I both know we wouldn't have any excitement if there weren't substance to it.

When I think about what ETFs offer ... what really makes them better than mutual funds and other easily accessible assets ... I come up with two things.

Number one is tax efficiency.

People try to argue this, but it isn't worth it: ETFs are more tax-efficient than mutual funds. There are exceptions - the nouveau asset classes like commodities, gold, currencies ... but for straight equities, ETFs are by-and-large a better mousetrap for taxable accounts.

If you don't believe me, go to Morningstar and look at the capital gains tax overhang of ETFs vs. competing mutual funds. It's zero vs. a lot.

Vanguard, with its index funds, has done a good job limiting capital gains tax distributions. But long, long term, my money is on ETFs to be more tax-efficient.

The other thing ETFs provide ... and this is the big one ... is easy access to institutional-caliber investments in important new asset classes.

Each phrase of that sentence is important, so I'll say it again ... easy access ... to institutional-caliber investments ... in important new asset classes.

ETFs are reshaping the investment landscape, transforming advisors from fund pickers into asset allocation strategists, and letting them compete head-to-head with the most sophisticated investors around.

Today, you can buy the entire stock market for 7 basis points, and you can also buy into commodities and real estate and timber. You can buy Treasuries, and you can also buy global TIPS, sophisticated quant strategies and buywrite funds. You can buy currency exposure, and you can also get leverage, sell short without using a margin account and tap into the carry strategy.

Essentially, you can do most of what the big boys running the Yale and Harvard endowments do, and you can do it for basis points from the comfort of your own brokerage account.

That's what ETFs offer, and that's why they are reshaping the investment landscape.