In 2005, assets held in exchange-traded funds (ETFs) rose
nearly 30 percent, to almost $300 billion. More than 50 new
ETFs were listed in the U.S. during the year, bringing the
total to around 200, so they can provide flexibility in
tailoring your portfolio.
With all the ETFs now on the market, you can use some for
broad market returns while others might be used in attempts
to boost overall results:
You can use the S&P 500 SPDR as well as iShares
MSCI EAFE Index Fund, which tracks developed foreign markets,
for exposure to the overall domestic and international markets,
respectively.
You can use other ETFs to move into favored asset classes or
market sectors. Vanguard VIPERS and iShares, for example,
both have ETFs that track health care and energy indexes.
Thus, if you’re upbeat about such a sector, you can add such
an ETF to your basic holdings. You can sell such an ETF when
its appeal falters without disturbing your long-term strategy.
