What to Look for Beyond ETFs Performance
Should choosing ETFs focus entirely on performance numbers? Head of Product Strategy of Vanguard, Scott Johnston, doesn’t believe so.
“The biggest decision is how much equity and how much fixed income in your portfolio,” he says. “The main thing that investors should look at is the goals that they have for their life and match the portfolio to the goal.”
In addition, he says if investors get too focused on specific returns of certain products then “we’re probably losing the big picture.”
According to Starlight Capital CEO & CIO, Dennis Mitchell, when it comes to keeping the big picture clearly in focus, the best option for most investors is always going to be to get advice.
“If you’re starting with a small portfolio or pool of assets really you should go and see a financial institution and talk to someone at the branch level,” Mitchell says.
So in the end, beyond performance and lower management fees than mutual funds, why have investors found ETFs so appealing? CEO of Inside ETFs, John Swolfs, explains why.
“Because they are transparent and you know exactly what you own,” he notes. “You can build a portfolio that doesn’t have a ton of overlap that you can have intended exposures. You don’t wind up being invested in something that you had no idea that you were going to be in there because an active manager put you into that position.”
Overall, it’s the transparency and the ability to tailor the portfolio to fit your exact needs that makes ETFs so popular.