Consider these key components as you evaluate ETF options

Provider: Consider character and capabilities
  • Select a provider you value, one with a history of delivering investment management expertise and timely insights.
  • Determine if the provider has experience beyond ETFs, including proven research capabilities.
  • Ensure that they provide support to you and is committed to helping you understand the product.
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Exposures: Don't overlook the underlying issue
  • Find out how the ETF’s underlying index is constructed so that you can understand the drivers of its performance.
  • Ask the questions: What is the investment objective? How are securities selected? How are weightings assigned? What are the potential sector or stock biases that result?
  • Be sure to understand the resulting implications of the index construction, and whether or not the process aligns with your investment objectives.
  • It’s important to remember all investments carry risk, ensure you consider all the risk implications before investing.
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Liquidity: Look beyond trading volume
  • Consider the ETF’s liquidity to determine if you can trade when needed and do so at a reasonable cost.
  • Understand that ETF trading volume is not an indicator of liquidity. Unlike a single stock, an ETF holds a basket of securities, and its liquidity depends upon the liquidity of all its underlying holdings, not just one stock.
  • Call for help when in doubt. Most ETF providers have Capital Markets desks to help guide you through the trading process.
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