AMA First Investment

Asked by Anonymous

Updated 4w ago

Given that ETFs are diverse in nature and low cost. How does one evaluate an ETF if its a good? What tools should you use and what should we be looking at in the quote?

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Harvey Tan
Harvey Tan,
Level 2. Rookie
Answered 4w ago

In general, you should be looking at :

Mornningstar did a study few years back on fund fees in relation to performance.

In short, the cheapest funds perforrm the best.

Please do not take my statement at face value and do your research

https://www.morningstar.com/articles/752485/fund-fees-predict-future-success-or-failure.html

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Luke Ho
Luke Ho, Money Maverick at Money Maverick
Level 6. Master
Answered on 02 Feb 2019

The one ETF everyone knows about is certainly not diverse in nature (The STI ETF). Consider the all-in cost including any account fees, trading fees, managing fees, rebalancing fees. Recognize that this is designed to be a long term decision.

Diversification should come across sectorally, not globally - meaning that it should be widespread across sectors like consumer staples, financials, tech, etc, not across countries like China, US, Malaysia, etc. Which is a little bit why the STI is a piece of gunk.

You could do much better than an ETF, but its your call.

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