An iShares spokeswoman claims that a prospectus allows investors to test the waters and investors should turn to the fund provider’s website for more information.
What can you do?
- First, know that most of the information average investors need is on the tear sheet, which we have on our site for most ETFs. You can find them on the ETF Resume.
- Second, still have questions about a particular fund? Call the ETF provider directly and ask! They are responsive and ready to hear from investors like you.
- Third, follow us! We regularly post information about ETFs and how they work. We’re on Twitter, Facebook and you can also sign up for our free daily newsletter.
Even though ETFs are simple to use and cost-effective, some things are not always so clear. And let’s not single out ETFs, either: any prospectus is bound to be difficult for most laypeople to wade through. But it doesn’t change the fact that you need to understand things like index structure and tax treatment – particularly in esoteric asset classes such as commodities and leveraged/inverse ETFs. Follow the steps above, and you’ll come out all right.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.