With over 1,600 U.S.-listed exchange traded funds on the market, building an investment portfolio may seem daunting, but it does not have to be.
Some investment advisors point out that new ETF investors can build a foundation with plain-vanilla, index-based products, writes Ari I. Weinberg for the Wall Street Journal.
“We focus on the largest ETFs by market cap because there is no need to buy anything else,” Mike Kane, chief executive of the asset-management firm Hedgeable, said in the WSJ article. “Investors are over complicating things by using more-exotic ETFs.”
Many of the largest ETFs capture broad market strokes. For instance, the SPDR S&P 500 ETF (NYSEArca: SPY) andiShares Core S&P 500 ETF (NYSEArca: IVV) are the two largest U.S.-listed ETFs on the market, with $201.8 billion and $71.2 billion in assets under management, respectively. The two ETFs try to mimic the performance S&P 500 index.
These broad, index-based ETFs try to passively reflect the performance of an underlying index, capturing large sections of both the domestic and international markets at a minimal cost. For instance, SPY has a 0.09% expense ratio and IVV has a 0.07% expense ratio.