Best ETFs for Investing?

For future individual investors, there are really three important ways to best ETFs for investment.

Expenses. All else being equal, you would like to get the ETF has a rock bottom expense ratio. Why? Well, assuming the ETF is representing an equivalent asset class, every dollar you save on expenses goes directly into your expected return from holding that investment.

Tracking Error. This one may be a bit harder for the individual investor to research but is additionally incredibly important. simply because an ETF says that it tracks a specific asset class doesn't suggest it does it also as other ETFs. All things being equal, you would like the ETF that tracks its asset class/index with the smallest amount of error.

Liquidity. Some ETFs trade many shares per day. Others trade infrequently. The more liquidity an ETF has, the lower the market spreads for pricing and thus lower implicit execution costs.

In 2011, Wealthfront published an excellent SlideShare presentation on this subject. I highly recommend that folks who have an interest in further information about this question check it out:

It's also worth noting that Wealthfront offers, for free of charge on its website, a portfolio-building that provides specific analysis for evaluating ETFs across eleven different asset classes. for every ETF they pick, they show the three ETFs that best met the above criteria, and explain the choice of the first ETF over the opposite options.