Try saying one-stop stock aloud three times. Give up? Never mind, all you have to do is remember it will give you an instantly diversified share portfolio.

And if the past two years are anything to go by, it will do better than most share funds pushed by advisers - and deliver a more diversified portfolio at a lower cost and with a higher return.

Then again, who wants an instant share portfolio in this rickety market? Well, I have it on good authority that not being in the market, even when it's at its worst, is for losers.

None other than the Australian Securities and Investments Commission says that over the past century, shares have scored a return of 7.5 percent a year after inflation.

That's the same as getting 12 percent a year from an online bank account for doing nothing. See? This is big money that compounds over time.

The one-stop stock - oops, sorry about the spittle - is an exchange traded fund, or what fund managers who are so attached to their acronyms call ETFs. Bully for them, but let's settle for one-stoppers because that's what they are.

They're no different to buying or selling ordinary shares except they hold bits of other stocks according to how big they are.

And so the SPDR S&P/ASX200 fund will hold some of every one of the top 200 stocks, the amount depending on what proportion of the S&P/ASX200 index it is.

For example, Telstra shares would be 4.35 percent of the portfolio. The same goes for a better-known index fund such as Vanguard. But one-stoppers come into their own due to their lower cost - unless you plan on making regular contributions - and their ease of getting in and out of.

In fact, the only cost of buying one is the brokerage which, depending on your broker, can be as little as $20.

The manager's fee once you're in is less than 0.3 percent, compared with about 0.75 percent for an unlisted index fund and 1.8 percent for a share fund.

One-stoppers shouldn't be confused with listed investment companies (LICs) which are stock pickers and would consider mimicking an index beneath them.

Although they make a point of their investment skill, their fees are about the same, and cheaper than a managed fund which can be as high as 2percent a year.

The other main difference is that LICs are far more susceptible to market sentiment and can trade well below (usually in a bull market because everybody deserts them for whatever's hot, which won't be them) or above (such as now) what their investments are worth.

So investing in one of the leading, long-established LICs would cost you slightly more than buying the shares in some cases, even allowing for what brokerage would cost you.

But one-stoppers can never get out of whack. Their prices cling to the value of the underlying investments because whenever there's a rush of sellers or buyers, shares can be created or cancelled as the case may be. Hmm. Why can't they do that for all stocks? Oh, silly me, it would take all the fun away, of course.

Remember, because one-stoppers hug the index, they have to buy the good with the bad whereas LICs can be more choosy.

By the same token, there's no chance of human error in a one-stopper, either. The fact that they can be bought and sold easily like other shares can also be a drawback.

No less than the world's most famous and successful investor, Warren Buffett, who is also an old-fashioned kind of guy, prefers ordinary old index funds to the new-fangled ETFs on account of the fact there's less temptation to trade them.

By the way, he says you should invest in little chunks at a time so as not to run the risk of getting your timing wrong and paying too much, but this can make one-stoppers dearer because you're up for brokerage every time. Both would seem to have it over other kinds of managed funds where about 2percent a year is gobbled up in fees and so start behind the eight ball.

As it turns out, just over half of actively managed share funds do better than a passive index fund, which means that your chances of finding a fund that will significantly outperform the index over time is roughly 50-50.

And that's ignoring the fact that the best performing funds tend to switch around over time, making it well nigh impossible to guess which one will do well in what year.

There are three alternative one-stoppers covering the Australian sharemarket to choose from. Through State Street Global Advisers, you can track either the top 50 (SFY) or 200 (STW) as well as the top 200 listed property trusts (SLF).

One-stoppers pay a good dividend most of the time - at the moment the dividend yield is almost 6.5percent, partially franked - but you wouldn't want to set your budget around them.

The most recent payout from the ASX50 was 102 cents, compared with 226 cents for the previous one.

Dividend franking fluctuated between 24 and 83percent over the past three years for no apparent rhyme or reason.

Still, a handy strategy is to use them as a core, diversified portfolio to which you can later add specific stocks if you want to.

But they also come into their own in a volatile market like this where plunging in at the wrong time could prove very costly, while staying out entirely risks missing out altogether when it recovers.

The idea is to park your money and see what happens. If the market is rising, you're ahead and if it falls, you haven't lost as much as you may have on individual stocks.

That's because broadly diversified portfolios never suffer as much as individual stocks can in a downturn.

Come to that, if you want to gear, one-stoppers are also safer than individual stocks.

Safer still would be to go into ETFs at regular intervals rather than in one hit.

Apart from providing a share portfolio straight off the peg, they can also give you an instant asset allocation if you're prepared to venture a bit further. You can put together a portfolio of shares from Australia, China, emerging economies and big names with them.

Weird as it sounds, you can trade the indexes of other sharemarkets on the ASX with iShares.Offered by Barclays Global Investors, iShares come in 14 flavours (listed in the table).

Annual fees range from just 0.09 to 0.74percent.

DIY super funds love them, especially the iShares Xinhua/FTSE 25 (code IZZ) which consists of 25 Class H and red-chip shares trading on the Hong Kong Stock Exchange and has returned an average 25percent a year since it started in November 2004.

Apart from the spectacular return, the attraction of iShares is that they give a bite of the emerging markets without a huge outlay. One IZZ share costs about $150, compared with a typical minimum investment of $20,000.

If you're really daring you can even buy other exchanges' exchanges. Er, I mean you can buy iShares listed on another exchange as distinct from iShares of another exchange listed here.

Whatever, the fact is you can buy iShares in sectors that Australia doesn't have - technology and pharmaceuticals, for instance - by buying a foreign iShare through our stock exchange.

Some other markets are also covered by foreign iShares such as Mexico, South Africa, Chile and Brazil.

There are even special iShares for gold and silver.

And don't forget, all iShares carry a currency risk, so you're taking a long-term punt that our dollar will fall.

HOW THEY COMPARE
                Listed investment company       ETF             Share fund      Index fund
Tax effective   Yes                     Yes             No              Yes
Manager fees    Low                     Low             High            Low
Volatile prices         Yes                     Yes             No              Yes
Diversification         Low                     High            Medium          High
Easy to quit    Yes                     Yes             No              Yes
Adds value      Yes                     No              Yes             No
Entry fee               Brokerage only          Brokerage only  Yes             Yes
Exit fee                Brokerage only          Brokerage only  Yes             No
Adviser linked  No                      No              Yes             No
14 FLAVOURS
Share           ASX code                What it covers          Fee (%)
Global 100      IOO             Global blue chips               0.4
MSCI EAFE       IVE             Europe, Australia, Far East     0.34
Europe 350      IEU             350 stocks in UK, Europe        0.6
S&P 500                 IVV             500 largest US stocks   0.09
S&P Midcap      IJH             400 US middle-size stocks       0.2
S&P Smallcap    IJR             600 US small stocks     0.2
Russell 2000    IRU             2000 small US stocks    0.2
MSCI Japan      IJP             Japanese shares                 0.52
MSCI Hong Kong  IHK             Hong Kong shares                0.52
MSCI Singapore  ISG             Singapore shares                0.51
MSCI Emerging   IEM             Global emerging markets         0.74
MSCI Taiwan     ITW             Taiwanese shares                0.68
MSCI South Korea        IKO             South Korean shares     0.68
FTSE/Xinhua     IZZ             Top 25 Chinese stocks   0.74