4. Your Own Portfolio. What do you already own? How well does the ETF you’re considering complement your goals and your existing holdings? Is it a good fit, or does it leave you overweight in a sector?
5. Past Performance. Past performance is no guarantee of future results, but does the ETF work? Does it track its underlying index well?
6. Other Education You May Need. Be sure to consider other things specific to certain types of ETFs. For example, leveraged and inverse ETFs don’t work like traditional ETFs. Active ETFs don’t track an index – how does the active ETF you’re considering operate? Commodity ETFs have certain tax considerations. Be sure to know and understand these things before you buy.
For more stories about ETFs, visit our ETF 101 category.