Q. Why would you choose an exchange-traded fund instead of a mutual fund? — A.R., via the Internet

A. It offers trading immediacy and the ability to target a specific investment area.

An exchange-traded fund (ETF) is priced on an exchange throughout the day, so you receive its price at the time you buy it just as you would with a stock. With a mutual fund, after putting in your order you will receive the fund's price set at the end of the trading day.

ETFs generally have lower annual expense ratios than mutual funds.

"The disadvantage of ETFs is that, because they are bought like a stock, you must pay a commission when you buy through a broker," said Mark Salzinger, publisher and editor of The No-Load Fund Investor (www.noloadfundinvestor.com) in Brentwood, Tennessee. "But of course you can find low commissions at an online broker."

ETFs permit investors more targeted exposure than mutual funds to specific niches, such as countries, regions, stock styles, stock sizes, industries and sectors. Mutual funds do offer sector-and country-specific funds, but not nearly as many of them.

Investors who want to make their trades quickly and have the confidence to bet on targeted areas therefore favour ETFs.

Q. Stock in Colgate-Palmolive Co. has been recommended to me. Please tell me if it is worth investing in. — L.A., via the Internet

A. This 200-year-old firm has navigated recession better than most of its consumer-products rivals thanks to an emphasis on lower-priced items such as toothpaste and soap.

Its namesake brand in oral care holds 44.8 percent share of the world toothpaste market, led by popular products such as Colgate Total. It has a 28 percent share of the conventional toothbrush market, with its 360 Degree toothbrush a best-seller.

Other well-known brands in its lineup include Palmolive, Ajax, Softsoap, Speed Stick and Irish Spring. It also sells Hill's Science Diet pet food through veterinarians and specialty pet retailers.

Price increases of 7.5 percent helped boost second-quarter profit by 14 percent. However, sales slipped in reaction to the higher prices, and the company doesn't plan more increases this year.

Colgate-Palmolive Co. (CL) stock is up seven percent this year following a decline of 10 percent last year and a 22 percent gain in 2007. It is a healthy company that generates significant cash and uses debt effectively.

Three-fourths of Colgate's sales come from outside the US. While that offers potential in developing markets as oral care improves there, it also means foreign currency fluctuations can have a negative impact on its bottom line. It can also encounter strong competition from local brands within those countries.

This is an efficient company that invests heavily in technology, such as SAP software and analysis tools.

The consensus analyst rating of Colgate stock is "buy", according to Thomson Reuters, consisting of three "strong buys", six "buys" and seven "holds".

Colgate's relatively small number of product categories does limit the number of new products it can introduce to increase profits. In addition, it hasn't developed strong brands in either mouthwashes or power toothbrushes.

Procter & Gamble is a powerful competitor with a larger array of products that Colgate must battle in a number of its lines. However, P&G's greater focus on higher-priced brands has hurt its results as budget-conscious shoppers seek out cheaper products during the recession.

Colgate-Palmolive earnings are expected to increase 11 percent this year versus a five percent decline for the personal products industry, according to Thomson Reuters. Next year's expected 11 percent increase compares to 13 percent industry-wide. The five-year annualised growth rate is 10 percent versus 11 percent forecast for its peers.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com.