Exchange traded funds may be efficient, low-cost and easy-to-use investment vehicles, but that does not mean that investors would blindly use the tools without concerns.

E*TRADE Financial Corporate recently conducted its StreetWise quarterly tracking survey of experienced investors and found that over half of investors are most worried about choosing the right ETF, specifically 53% of investors.

According to XTF data, there are now 1,993 exchange traded products from 103 fund sponsors with $2.8 trillion in assets under management. This year along, 40 new funds launched while 18 were delisted.

Around 41% of investors indicated that the complexity of ETFs were a major cause of concern. As the ETF industry continues to expand, fund providers have shifted away from traditional beta-index, capitalization-weighted ETFs toward customized or smart-beta strategies. Consequently, the increasingly complex strategies providers are bringing to market have become a point of concern as investors worry that the funds’ actual performance may not align with expectations.

About 35% of investors indicated that the tracking error or difference between an ETF and its underlying net asset value is also another cause for concern. Most ETFs are index based and passively mirror the performance of a specific underlying index, but some ETFs’ performances may diverge from their net asset value, which can cause unwanted surprises.

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