Distressing News About ETFs

Many exchange-traded funds are not keeping up with their benchmarks. ETFs that try to match esoteric indexes such as the High Growth Rate Dividend Achievers Index, in the hopes of generating high returns, are likely to fall short.

There is a reason for this: These funds can't always buy all the shares they need in order to match the indexes because some of the underlying shares may be thinly traded or available only on indexes of certain foreign countries.

How can you protect yourself from having this experience? Stick with low-cost ETFs whose benchmarks are large, well-known indexes. ETFs that have low expenses and track major indexes like the S&P 500, usually match their benchmarks almost precisely.

* * * * *