A. There are nearly 2,000 exchange-traded products in the U.S. now, for any index you want to benchmark with, you can find multiple ETFs. So how do you choose the best ETFs once you set your index target?
First, be clear on which index you want to track - is it a major stock index or a sector-specific index?
Second, find the list of ETFs that benchmark this index. You can start with one ETF, enter its symbol in Yahoo Finance and you can usually find some related ones and go from there.
Third, find out how the ETFs you are researching perform well against the underlying index's performance, you can get the performance data from Yahoo Finance. If two ETFs that track the same index have similar performance, pick the one with the lowest expense ratio.
Note, not all ETFs track indexes, we will discuss some exceptions in our next blog post.