Does one have to wait for a performance record on an exchange traded fund before making the purchase?  Not necessarily.

Many ETFs track indexes and if that is the case, then the index already has an established track record.  iShares Russell 2000 (IWM) is an example, it is an ETF that tracks the actual Russell 2000 Index.

Some ETFs are now tracking commodities, such as iShares Comex Gold (IAU) and soon silver.  These too can be tracked, by looking at the relative price of the commodity.

It is also easy to find out the top holdings in an ETF, which allows one to track the particular stock holding.  The top holding for Internet Infrastructure HOLDRS (IIH) is Verisign (VRSN) and it makes up 44% of the ETF.

These three scenarios make it relatively easy to research an ETF and look at a track record.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.