Roger Nusbaum of TheStreet.com has a few clarifications for those concerned about exchange traded fund (ETF) misinformation. He feels this comes about by a fundamental lack of understanding of the product and the importance of forward-looking analysis. Before labeling an ETF a gimmick because it represents a thinly sliced sector, one should consider the underlying benefits.
Dismissing ETFs because they slice and dice the market up too much or assuming all ETFs that own the same stocks within the S&P 500 will have the same ending is a big mistake. Investors who want the extra edge need to be aware of these tweaks in the market and yes, must look under an ETFs hood, but not dismiss an irregularity as a performance flaw because it may just be what makes the fund deliver.
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.