Saturday, May 14, 2011

Not All ETFs Are Acceptable

Look closely at the exchange traded funds (ETFs) you buy because they are not all alike. Some may be managed when the original idea for their growth has been for them to follow indexes, unmanaged.

ETF funds that trade infrequently will have big differences between bid and asked prices. And also their net asset values. You want to avoid those losses and discrepancies.

ETF charge fees will vary and may be way too high in many instances.

Then there are ETFs that don’t follow their chosen index too well. Focus may be poor, just to suit a current market. That will defeat the original purpose you may have had for investing in them.

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