Consider An ETF If Its Cheap, Liquid, Follows A Coherent Mandate And Isn’t A Duplicate

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November 10, 2009 1:41pm ETF BASIC NEWS

low-cost“Charles Schwab just launched eight exchange-traded funds into a crowded field of more than 700, and the investment giant promises more funds are in the offing


. Schwab has a good reputation for putting out well-constructed low-cost products, so these are probably worth a look based on reputation alone. But no matter who’s behind an ETF, remember that a new one is only worth your attention if its cheap, liquid, follows a coherent mandate and isn’t a duplicate of more established funds,” Alexandra Zendrian Reports From Forbes.

“Schwab has these domestic ETFs: Schwab U.S. Broad Market ETF, Schwab U.S. Large-Cap ETF, Schwab U.S. Large-Cap Growth ETF, Schwab U.S. Large-Cap Value ETF, Schwab U.S. Small-Cap ETF. There are also three international ETFs, including Schwab International Equity, Schwab International Small-Cap Equity ETF and Schwab Emerging Markets Equity ETF. All look solid, but there are competing products out there, so make sure you’re getting the cheapest deal,” Zendrian Reports.

“Michael Kitces, financial planner at the Pinnacle Advisory Group, says investors should look at the fund’s liquidity, construction, tracking error, cost and viability. Investors should look for ETFs with higher trading volume and small tracking errors when compared to their underlying indexes. Without a lot of liquidity, these funds can be difficult to trade into and out of,” Zendrian Reports.

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