When selecting an ETF (Exchange-Traded Fund), there are several key indicators and factors to consider to ensure it aligns with your investment goals and risk tolerance. Here are some important ones:
- Investment Objective: Understand the ETF’s goal. Is it designed to track a particular index, sector, commodity, or region? Ensure its objective aligns with your investment strategy.
- Past Performance: While past performance is not indicative of future results, it can provide insights into how the ETF has reacted to market conditions. Look at its performance over different time frames, such as 1 year, 5 years, or since inception.
- Expense Ratio: This is the annual fee expressed as a percentage of the ETF’s average net assets. Lower expense ratios can significantly impact long-term investment returns, especially for passive, index-tracking ETFs.
- Liquidity: Check the trading volume of the ETF. Higher trading volumes generally mean better liquidity, making it easier to buy and sell shares without impacting the price too much.
- Tracking Error: For ETFs that track an index, the tracking error indicates how closely the ETF follows the index. A smaller tracking error means the ETF is more accurately replicating the index’s performance.
- Dividend Yield: If income is a goal, consider the ETF’s dividend yield. This is the dividend per share, divided by the price per share, expressed as a percentage.
- Holdings and Diversification: Look at what the ETF actually holds. Is it diversified across many stocks, sectors, and regions, or is it concentrated in a specific area? Diversification can reduce risk.
- Issuer Reputation and Size: Consider the reputation and size of the ETF provider. Larger, well-established providers can offer more stability and resources.
- Tax Efficiency: This depends on the ETF structure and your jurisdiction. Some ETFs are more tax-efficient than others, depending on how they are managed and the tax laws applicable to you.
- Bid-Ask Spread: This is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). A narrower spread is generally better for investors.
- Total Assets Under Management (AUM): A higher AUM can indicate investor confidence and typically means better liquidity and smaller tracking errors.
- Thematic Fit: If you are considering thematic or sector-specific ETFs, ensure that the theme aligns with your belief in the sector’s future growth prospects.
- Risk Factors: Assess the risks associated with the ETF, including market risk, currency risk, interest rate risk, and specific sector risks.
Each investor’s situation is unique, so it’s crucial to consider these factors in the context of your personal investment goals, risk tolerance, and time horizon. Consulting with a financial advisor is also a good practice, especially for more complex investment decisions.
Source you can verify past ETF performance is at justetf.com
Example of companies recommended by chatgpt 🙂
Creating a detailed table with the list of companies in each ETF and their respective continents would be quite extensive, as ETFs like the ones mentioned typically contain hundreds to thousands of companies. However, I can provide a summary table with the key details of each ETF, including their focus areas and geographical coverage:
| ETF Name | Ticker | Focus Area/Industry | Geographical Coverage | Number of Companies | Annual Expense Ratio |
|---|---|---|---|---|---|
| Vanguard S&P 500 | VUSA | Large American Companies | United States | 500+ | 0.07% |
| Vanguard All-World | VWCE | Global Market | Worldwide | 3,300+ | 0.22% |
| iShares China Large Cap UCITS | IQQC | Large Chinese Companies | China | 25 | 0.76% |
| Invesco EQQQ NASDAQ-100 UCITS | EQQQ | Technology and Innovation | Primarily United States | 100+ | 0.3% |
| iShares Automation & Robotics UCITS | 2B76 | Automation and Robotics | Global, focus on tech sector | – | 0.4% |
| iShares Global Clean Energy UCITS | IQQH | Clean Energy | Global | – | 0.65% |
| SPDR Russell 2000 US Small Cap UCITS | ZPRR | Small Cap American Companies | United States | 1,600+ | 0.3% |
| VanEck Vectors Semiconductor UCITS | VVSM | Semiconductor Industry | Global, with a focus on tech | – | 0.35% |
| iShares Core MSCI World Accumulating (IWDA) | IWDA | Diverse Global Companies | 23 Developed Countries | 1,510 | 0.20% |
| Vanguard FTSE All-World Accumulating (VWCE) | VWCE | Broad Global Market | Worldwide | 3,372 | 0.22% |
| iShares NASDAQ-100 Accumulating (CNDX) | CNDX | Technology Companies (Nasdaq-100 Index) | Primarily United States | 101 | 0.33% |
Please note:
- The number of companies listed for some ETFs is not specified as these ETFs have a thematic focus rather than a specific number of companies.
- The geographical coverage mentioned is indicative of the primary focus of the ETFs, though they may include companies from other regions as well.
- The expense ratios are as per the latest available data and may vary.
For detailed information on the specific companies included in each ETF, it’s best to refer to the fund’s prospectus or the fund provider’s website, as these documents will provide comprehensive lists and further details about the fund’s holdings and strategy.
