Exchange traded funds (ETFs) are a great versatile tool for all types of investors and offer many advantages that no other investment tool does, but there are things to be mindful of.

Those who advocate the use of ETFs note that they offer low expense ratios, diversification, tax efficiency, exposure to sectors and markets that traditionally can’t be accessed through an index and transparency.  One of the greatest things they offer investors is a vast array of choices that can satisfy any appetite.

But just as with any investment, they’re not perfect and come with issues of their own. Not all of the criticism is on target, though.

David Randall of Forbes states that U.S. Oil Fund (USO) is an example of an ETF with big pitfalls.  He states that this particular ETF is a disaster because it buys futures in a bid to track a thin underlying market and deceives investors.

We believe that it is a great way to grab exposure to the volatile commodity market, especially with an expense ratio of 0.45%, and utilize it as a hedge against rising oil prices.  Additionally, we believe that all investors should do their homework, look under the hood, and have a strategy before entering or exiting a trade.  After all, you control the destiny of your money, and you don’t have to buy a fund that doesn’t meet your objectives. Not all funds are right for all investors.