Exchange traded funds (ETFs) got their start in 1993 with Standard & Poor’s Depositary Receipts, also known as “spiders.” That fund followed (tracked) the S&P 500, and its popularity became the catalyst that kicked off the ETF revolution and led to the introduction of other ETFs based on other benchmark indexes.
From their early start as stock index trackers, ETFs have grown to include a dizzying array of investment options and even though ETFs track certain stock indexes, ETFs are not always equal in the quality of their investments. As a matter of fact, the incredible growth in ETFs has probably increased the chance that the one you pick will be liquidated (usually because of a lack of investor interest).
How can you find a profitable ETF to fit your portfolio?
Given the staggering number of ETF choices available to investors, consider the following factors when selecting the best ETF(s) for your portfolio.