As the exchange traded fund industry craft more specialized offerings, investors shouldn’t forget that the funds provide broad market exposure, such as equity market segments and asset classes.

“The most important determination you can make is not necessarily which securities you want to buy or you want to hold,” David Armstrong, Portfolio Manager with Good Harbor Financial, said in an interview. “More importantly, do you even want to hold equity risk in a portfolio.”

Once an investor has a general idea of where to begin. He or she can begin including core portfolio holdings. For instance, Armstrong points out that ETFs are a good way to gain access to broad market indices.

“[We] use ETFs to buy index-based exposure and use that in such a way that we’re getting a broad allocation to the markets,” Armstrong added.

With over 1,400 ETFs available, investors don’t have to get fancy. [Build a Diversified Investment Portfolio with Just Three ETFs]

“We’ll get as discreet as to invest in a combination of large-cap indices, some mid-cap indices or small-cap indices, but no more granular than that,” Armstrong said.

Watch the video below to see the full interview with Dave Armstrong.

To view past video interviews, visit our videos section.

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.