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section header ETF fundamentals

subsection header Basics

What are some considerations for choosing an ETF platform?

Many types of ETFs are available on both local and foreign platforms.

Commonly used ETF platforms include U.S.-domiciled funds as well as UCITS, which are domiciled in Europe. Each ETF platform may have advantages and drawbacks for investors.

Generally, investors should make decisions about portfolio construction before they select an ETF platform. For example, you might decide to buy an emerging markets ETF to fill a gap in a portfolio. Then you could compare all the emerging markets ETFs available on different platforms.

Comparing ETFs across platforms is similar to comparing ETFs within the same platform, in that certain considerations always apply. These include:

 

Costs

These include one-time costs such as commissions and the bid-ask spread, and ongoing costs such as the expense ratio.

 

Exposure

Two ETFs targeting the same market segment may use different benchmarks and, therefore, have different country or sector weights.

 

Tracking

Tracking difference is more relevant if your objective is total return over the long-term. Whereas tracking error is more relevant if your objective is short-term performance consistency.

 

Trading hours

An ETF's underlying securities may trade in different time zones than the ETF itself. This can result in larger bid-ask spreads during certain times of day.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

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Indexing

Learn about the advantages of indexing, how ETFs are indexed, the differences between excess return and tracking error, and more.

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Trading

Learn how ETFs trade, where they get liquidity, common order types, how premiums and discounts work and more.

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Strategies

Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.

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