How do you choose the best ETFs for investing in 2021?
There are objective criteria that will be wont to prioritize which ETF would, ex-ante, presumably be a more appropriate selection than others. the standards that we use include, in no special order of priority:
- Issuer: This looks at the issuer of the ETF. Their diary,
credibility & reputation, what percentage of assets under management (AUM) do
they have?
- AUM & Age: How long has the ETF been around for and the
way large is it in terms of AUM? If it's relatively new and with relatively low
AUM? How serious can we judge the issuer to be? How large a share of the ETF’s
AUM are our clients likely to represent?
- Total Expense Ratio: How expensive will the ETF be over the
longer-term?
- Tracking Error & Tracking Difference: How good
employment does the ETF do at tracking its index?
- Distribution Policy: Does the ETF distribute the dividends
it receives, and, if so, how frequently?
- Tax Status: Does the ETF issuer report the relevant tax
information for it to be eligible to be included in tax wrappers?
- Tax Domicile: Where is that the ETF domiciled, and what are
the tax treaties between the ETF’s country of domicile and therefore the
countries where the underlying assets are domiciled? How does this impact the
taxation of dividend distributions?
- Accounting Currency: How well does the ETF’s internal
accounting currency match the currencies within the countries where the
underlying assets are domiciled?
- Trading Currency: Does the ETF trade the currency of the
portfolio during which it's to be held or would there be the potential for
inefficiencies thanks to currency exchange?
- Listings: On what exchanges do the ETFs trade?
- On Exchange Liquidity & Spreads: How liquid is trading within the ETF on the exchanges where it's listed? How costly wouldn't it be to trade on said exchange?
You can read more about our Investment Approach in our best ETFs for 2021
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