A series of misses from similar stocks or a group of market leaders will oftentimes lead to broad-based selling that impacts these funds. The opposite effect can also occur if positive effects lead stocks higher.
I’m not advocating that you replace every single stock in your portfolio with an ETF equivalent. However, for most investors, these vehicles represent a much easier way to access broad exposure or tactical themes. The added bonus is that you have far less at stake than individual stock owners during this quarterly ceremony.
This article is brought to you courtesy of David Fabian.