25 things you should know about ETFs
Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.The article below comes courtesy of Michael Johnston of ETF Database.“The rapid expansion of the ETF industry has been one of the most important developments of the last several decades to financial professionals; as the line-up of exchange-traded products has surged past 1,300, financial advisors now have more tools in their toolkits than ever before to help construct client portfolios. With these new financial products comes a responsibility to understand the various risk factors and nuances of exchange-traded products, and as the industry has expanded rapidly the amount of information to digest has swelled as well. While ETF education must be an ongoing process, there are a number of basics that can enhance overall understanding, identify opportunities and limitations, and generally promote a better experience with ETFs.Johnston then lists 25 key aspects investors and advisors should be focusing on when it comes to investment in ETFs. These are listed below, but I would suggest you click through to the full article for a comprehensive description of each of the bullets.1. Volume ≠Liquidity2. Market Orders Just Might Burn You3. Not All ETF Expense Ratios Are Created Equal4. Bigger Does Not Equal Better5. There’s More To ETF Expenses Than Expense Ratios6. Structure Matters7. Commodity ETFs Get A Bad Rap8. Diversification Should Not Be An Assumption9. ETFs Can Close …10. … And ETNs Can Fail11. There’s An ETF For That12. Keep It Simple…13. …But Not Too Simple14. Watch Your Weight15. Contango Can Be A Killer (And Backwardation Can Be A Blessing)16. There’s More To ETFs Than Low Fees17. ETFs Are Not An Acceptance Of Mediocrity18. ETFs Did Not Cause The Flash Crash19. An ETF Cannot Collapse20. Bond ETFs Can Be Flawed21. ETFs Are A Vehicle (Not A Strategy)22. Odds Are, You’ve Got Options23. Nice Returns Can Come In Small Caps (Or Not)24. Sometimes, ETFs Aren’t The Best Option25. Free ETF Tools Can Make Your Life EasierSource: Michael Johnston of ETF Database, November 2, 2011.Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.25 things you should know about ETFs was first posted on November 7, 2011 at 9:50 am.©2011 "Investment Postcards from Cape Town". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at wordpress@investmentpostcards.comFeed enhanced by the Add To Feed Plugin by Ajay D'Souza
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