This article was written by David Trainer, CEO of New Constructs.
Having too many choices can be intimidating for many investors and there are definitely lots of choices when it comes to ETFs. For example, in the equity market alone, there are 30+ technology sector ETFs, or 35 ‘large cap value’ and 20 financial ETFs. A very healthy selection abounds for every category of ETF.
The problem is that these ETFs are not made the same even though they may be in the same category. There are major differences in methodologies between funds, which results in drastically different holdings even within a given sector. Consider the chart below (figure 1) which compares all of the ETFs in the Technology Equities ETFdb Category and the number of holdings within each fund: [click to continue…]
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