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Jim Cramer does not like exchange traded funds. On CNBC Mad Money, Cramer railed against ETFs, claiming that "they often create enormous distortions that can obliterate even the best of stocks" and questioned the vehicles' diversification benefits. Investors should buy single stocks -- the best in a growing sector -- and avoid baskets that may contain "mediocre" names and weigh on potential returns, he says.

CFRA's Todd Rosenbluth did not take kindly to those claims and issued a rebuttal. Stocks aren't going to trade in tandem just because they exist together in an ETF, says Rosenbluth. For example, PureFunds ISE Cyber Security ETF (HACK) has gathered some $150 million of fresh money, but its top 10 index constituents aren't moving in the same direction. For example, Symantec (SYMC) has gained nearly 29% year-to-date, but Gigamon (GIMO) has fallen 23% thus far. Both stocks have virtually the same weighting in the underlying index.

Rosenbluth adds that ETFs' can actually help ease the pain when a stock falls out of favor. He writes:

For example,

Sears Holdings

(SHLD) declined sharply today after acknowledging bankruptcy risk. Investors who owned Sears through an ETF like

SPDR S&P Retail ETF

(

) were protected by the ETF's stakes in

Amazon.com

(AMZN),

Netflix

(NFLX),

Wal-Mart

(WMT) and other retailers with stronger fundamentals.

Here is Rosenbluth's response in full.

As I pointed out in my column What Fund Flows Really Say About the Market, ETF flows can have a meaningful impact on financials stocks' trading volumes and in turn, performance. KBW's Melissa Roberts explained that while robust flows into financial ETFs have supported the sector's outperformance, there is little evidence that significant outflows could take stocks down. An excerpt from my column:

If there is nothing fundamentally wrong with a stock, there will be support, Roberts says. ETF money isn’t the only factor. There would have to be a perfect storm of factors for outflows to drag down stocks.