When browsing for an exchange traded fund, investors typically make a bee-line toward the largest ETF in a given market segment. However, with over 1,400 funds available, people should also look at alternative products that cover similar strategies.
If you take the time to look around, there are a number of funds outside the big ETFs that could provide better returns and diversification, writes Aaron Levitt for Investopedia.
For instance, many have invested in the SPDR Gold Shares (GLD) , which has a 0.40% expense ratio, as a way to hedge against quantitative easing, debt issues and inflation expectations. Alternatively, the iShares Gold Trust (IAU) is a similar offering but comes with a 0.25% expense ratio. [Reasons Why Gold ETFs Could Bounce Back]
Additionally, the ETFS Physical PM Basket (GLTR) and the ETFS Physical White Metals Basket Share (WITE) provide exposure to a basket of various precious metals. WITE holds the “white metals” silver, platinum and palladium; and GLTR holds a basket of silver, platinum, palladium and gold. [Why Platinum and Palladium ETFs are Breaking Out]
Investors who are interested in a broad large-cap index ETF do not have to stick with the S&P 500. For instance, the Vanguard Mega Cap ETF (MGC) , which tracks the CRSP US Mega Index, has outperformed the S&P 500 by 1% annually over the past three years. [Focus on Value with Large-Cap ETFs]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
- SPDR Gold Shares