Considering exchange-traded funds (ETFs)? Understand fit, style, and value before you shop.
Doing a little shopping for your portfolio this season? Perhaps you should consider exchange-traded funds (ETFs) as a potentially lower-cost investment for pursuing your investing objectives.
But before you jump in and start to pick ETFs, take a moment to do a bit of window-shopping and assess the fit, style, and value.
ETFs are baskets of securities that typically track a sector-specific, country-specific, or a narrow- or broad-market index and are thus considered to be passively managed. (In other words, someone isn’t actively choosing which stocks to buy and sell.) They’re listed on exchanges just like stock, so you can conveniently trade them through your brokerage account. Keep in mind that the risks you face when trading equities are the same risks that you face when trading ETFs. And ETFs can offer some potential benefits:
When you hit the shopping mall, say to buy a new suit, dress, or pair of shoes, you likely look at three things—comfort, style and value. Shopping for an ETF involves pretty much the same considerations. Here are some ideas of what you may want to consider when looking for an ETF.
As you look through the investment universe to find the best ETF candidates for you, look at key metrics for each fund you’re considering—performance statistics, ratings, and expense ratios, to name a few. But it may also help to know yourself—your investing objectives, time horizons, and risk tolerance. Here are a few things to consider:
As you pick ETFs, first determine what you’re investing for.
Do your research.
Be mindful of fees.
Ready to start your search for the best ETFs for you? TD Ameritrade clients can start with the TD Ameritrade ETF Market Center, which provides a broad selection of ETF research tools and third-party market insights/analyses. And, it’s home to a list of more than 300 commission-free ETFs, which can provide you with a wide range of potentially low-cost investment opportunities.
Carefully consider the investment objectives, risks, charges and expenses before investing. A prospectus, obtained by calling 800-669-3900, contains this and other important information about an investment company. Read carefully before investing.
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Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
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