ETFs for the Long Run: What They Are, How They Work, and Simple Strategies for Successful Long-Term Investing

APPENDIX

How to Decide Which ETFs Are Best for You

(This is an edited version of an article I wrote for TheStreet.com on December 4, 2007.)

 

 

With so many exchange-traded funds hitting the market, it’s becoming tougher to compare them.

A small group of websites with screening tools and educational resources are vying to become the single go-to site for investors. To date, none offers true one-stop shopping. However, when used together, they can help you decide which ETFs are best for your portfolio.

ETFguide, an independent online resource, focuses on education. It also offers two proprietary functions that classify ETFs and let investors screen for funds that meet specific criteria. The education section compares ETFs to individual stocks, mutual funds, and closed-end funds, as well as describing advanced strategies in a simple, easy-to-understand format. There’s also a subscription-based area with six model ETF portfolios. One of these, the Contrarian Fox, was explained in Chapter 10. The site produces original articles on industry developments, including the launch of new ETFs. One of its unique features is a quarterly survey of expense ratios.

One proprietary tool is a system for classifying funds. Essentially an adaptation of the classic mutual fund-style boxes, it looks at factors relevant only to ETFs. For example, instead of measuring a fund’s investment style in terms of the asset class or size of company it holds, ETFguide classifies funds according to the way their ...