Choosing the right ETF | BlackRock (2024)

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Choosing the right ETF | BlackRock (2024)

FAQs

How to choose the right ETF? ›

Before purchasing an ETF there are five factors to take into account 1) performance of the ETF 2) the underlying index of the ETF 3) the ETF's structure 4) when and how to trade the ETF and 5) the total cost of the ETF.

How do you evaluate which ETF to buy? ›

The key liquidity factors are:
  1. The underlying securities of the ETF - highly tradable are better.
  2. Fund size - larger tends to be better.
  3. Daily trading volume - more tends to be better.
  4. Market makers - more is better.
  5. Market conditions - liquidity can decline when the markets are very volatile.

How do you know if an ETF is doing well? ›

Since the job of most ETFs is to track an index, we can assess an ETF's efficiency by weighing the fee rate the fund charges against how well it “tracks”—or replicates the performance of—its index. ETFs that charge low fees and track their indexes tightly are highly efficient and do their job well.

Why do you choose an ETF? ›

ETFs typically mimic a market index like the S&P 500. Since ETF performance is usually based on an index — meaning they follow the ups and downs of said index — most are passively managed investments and thus likely have lower fees than mutual funds.

What is the number 1 ETF to buy? ›

Top U.S. market-cap index ETFs
Fund (ticker)YTD performanceExpense ratio
Vanguard S&P 500 ETF (VOO)7.7 percent0.03 percent
SPDR S&P 500 ETF Trust (SPY)7.6 percent0.095 percent
iShares Core S&P 500 ETF (IVV)7.7 percent0.03 percent
Invesco QQQ Trust (QQQ)5.8 percent0.20 percent

How many ETFs should I start with? ›

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.

How do I know when to buy ETFs? ›

If an ETF still has large trading volumes, a price that isn't moving radically up and down with each new trade, and fairly small bid-ask spreads (see the next section), then the market price is likely a better indicator of portfolio's true value than the NAV, and it is safe to proceed with a trade.

How do you know if an ETF is growth or value? ›

Growth ETFs may have higher long-term returns but come with more risk. Value ETFs are more conservative; they may perform better in volatile markets but can come with less potential for growth.

How do you know if an ETF is undervalued? ›

Evaluate the ETF's Premium or Discount

If the ETF is trading at a premium, it could indicate that the ETF is overvalued. If it's trading at a discount, it could indicate that the ETF is undervalued. Keep in mind that the premium or discount can also be affected by market conditions and investor sentiment.

What is the downside to an ETF? ›

For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.

How long should you stay invested in ETF? ›

Hold ETFs throughout your working life. Hold ETFs as long as you can, give compound interest time to work for you. Sell ETFs to fund your retirement. Don't sell ETFs during a market crash.

Is it smart to just invest in ETFs? ›

ETFs make a great pick for many investors who are starting out as well as for those who simply don't want to do all the legwork required to own individual stocks. Though it's possible to find the big winners among individual stocks, you have strong odds of doing well consistently with ETFs.

How do you pick the right ETF? ›

Ultimately, investors choosing an ETF need to ask 3 questions: What exposure does this ETF have? How well does the ETF deliver this exposure? And how efficiently can I access the ETF? Look at the ETF's underlying index (benchmark) to determine the exposure you're getting.

What are the 4 benefits of ETFs? ›

Positive aspects of ETFs

The 4 most prominent advantages are trading flexibility, portfolio diversification and risk management, lower costs versus like mutual funds, and potential tax benefits.

Which ETF gives the highest return? ›

Performance of ETFs
SchemesLatest PriceReturns in % (as on May 23, 2024)
CPSE Exchange Traded Fund93.19119.52
Kotak PSU Bank ETF737.7382.34
Nippon ETF PSU Bank BeES82.0182.35
SBI - ETF Nifty Next 5068.38
33 more rows

Which type of ETF is best? ›

List of 15 Best ETFs in India
  • Nippon India ETF Nifty 50 BeES. ₹ 241.63.
  • Nippon India ETF PSU Bank BeES. ₹ 76.03.
  • BHARAT 22 ETF. ₹ 96.10.
  • Mirae Asset NYSE FANG+ ETF. ₹ 84.5.
  • UTI S&P BSE Sensex ETF. ₹ 781.
  • Nippon India ETF Gold BeES. ₹ 55.5.
  • Nippon India Etf Nifty Bank Bees. ₹ 471.9.
  • HDFC Nifty50 Value 20 ETF. ₹ 123.2.
Mar 27, 2024

Is Vanguard or Fidelity better for ETFs? ›

Fidelity: Features. Both Fidelity and Vanguard have a wide variety of low-cost mutual funds and ETFs. If you're simply looking at the options offered by each firm, Fidelity has more options available.

What ETFs should be in your portfolio? ›

10 ETFs to Build a Diversified Portfolio
FundExpense Ratio
iShares Core Moderate Allocation ETF (ticker: AOM)0.15%
iShares MSCI World ETF (URTH)0.24%
Vanguard Total World Bond ETF (BNDW)0.05%
iShares National Muni Bond ETF (MUB)0.05%
6 more rows
May 2, 2024

Is spy better than voo? ›

Over the long run, they do compound—those fee differences—and investors have been putting a lot more money into VOO versus SPY. That is the reason why we view VOO slightly better than SPY. And that is just the basic approach, which is the lower the investor can pay, the better the investment is.

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