Dan Culloton of Morningstar writes that exchange traded funds (ETFs) can be a good choice when there are slim pickings of mutual funds. Morningstar reviews mutual funds and make their pick based on the manager consistently and successfully using unique, long-term strategies with reasonable expenses. This is just another example of the growth of ETFs and the usefulness they provide for portfolios.
Those categories to use an ETF as a stand-in include:
- Natural Resources: iPath Dow Jones AIG Commodity Total Return Index (DJP) This ETN actually has inflation protection and diversification.
- Japan: iShares MSCI Japan Index (EWJ)This ETF provides exposure to 85% of Japan’s market.
- Diversified Pacific/Asia: WisdomTree Pacific ex-Japan Total Dividend (DND) This ETF ranks by dividend payouts instead of market capitalization.
- Small-Cap Value and Blend: iShares S&P Small Cap 600 Value Index (IJS) Although Mornigstar has a few picks in this category, most aren’t available to new investors. An ETF is a good alternative.
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.