By Dave Fry
In choosing the right mix of ETFs, less is often more.
For most investors, the choice frequently comes down to brand and fees. My advice is not to worry about whether you're paying .07% or 0.20%. Look instead for diversification and trading liquidity, keep fees to a minimum, and try to stay focused when you’re in a maze of choices.
Want cheap stocks? 4% yields? Look overseas
Financial advisor Andrew Burish of UBS says U.S. stocks are selling near all-time high valuations, while European shares are in the bargain basement. Time to buy low.
Frequently, though, your ETF options are straightforward. ETF provider State Street Global Advisors, for example, has divided the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.01% into its various components or sectors. This allows investors to target energy or financials for example. In addition, Vanguard Group, BlackRock’s iShares, Charles Schwab and others feature indexed offerings based on inexpensive fees. Meanwhile PowerShares DB and First Trust provide semi-active indexes designed to outperform the larger issuers.
Keep in mind that given how highly correlated many ETF sectors are to one another, adding more of the same trending ETFs may only look good on paper.
Alternatives such as gold or currency ETFs, can be a good fit in an investor's portfolio.
For gold, look to SPDR Gold Trust /zigman2/quotes/200593176/composite GLD +0.07% and other precious metals ETFs that own gold, while currencies including the euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2556% , and the yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.4324% are available in leveraged issues, including ProShares Ultra Euro /zigman2/quotes/206913068/composite EUO +0.67% , ProShares UltraShort Euro /zigman2/quotes/205757476/composite ULE -0.79% ProShares Ultra Yen /zigman2/quotes/203920350/composite YCL -0.28% and ProShares UltraShort Yen /zigman2/quotes/208659456/composite YCS +1.05% .
Avoid ETFs that have been around but assets have slipped below $5 million; the fund is likely a candidate for termination.