Exchange traded funds (ETFs) can be more like a specialty, organic foods market than a general marketplace. While the organic store has the main items found in a supermarket, they tend to focus in on just organic items. The same can be true for ETFs, there are smaller ETFs focusing on niche markets as well as ETFs that cover broad areas of the market. With more than 500 ETF options available, Karen Bluementhal for the Washington Post likens the choices to be just as overwhelming as the variety of peppers in the produce section. Individual investors should be discerning and choose funds that will complement their portfolio and investment needs. Education and research should be incorporated when investing in niche or specialty ETFs because they invest in various, specific sectors other than the broad market.
What kinds of ETFs will work for you depend on how often you invest and trade, how much you invest and what you prefer in your portfolio. For example, ETFs offer a great way to buy a global position. They also tend to be much more cost efficient than mutual funds when investing large sums of money, such as $10,000.
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.