As an investor stumbles upon the nifty exchange traded fund investment vehicle, there are some basic steps to take to pick out the best ETF.

ETFs allow investors to diversify a portfolio by accessing a broad number of companies or securities from a range of asset categories. The investment tool is cheap, tax efficient and easy to trade.

Nevertheless, no two ETFs are created the same, so investors should still do their due diligence before picking one out. For starters, less expensive ETFs may be a better bet, Simon Moore writes for Forbes.

A number of academic studies have shown that lower fees or costs have shown to, on average, lead to improved performance. Most ETFs are passive products so they just simply track an index, and the process is more or less automated so costs are depressed. With less fees to dish out, an investor has more left over to grow their wealth.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.