In his recent Kiplinger article, “Getting Past the ETF Clutter”, Jeffrey R. Kosnett discusses some methods for picking winning ETFs and offers some Kiplinger’s “Choices” for the right” ETFs in 13 popular investment classes.”
Mr. Kosnett suggests that investors should look for low expenses and focus on ETFs that describe their goals and methods. For example, he explains that if an ETF uses a proprietary system to build its portfolio, it should still give a clear explanation on how it builds the portfolio.
He adds that investors should avoid ETFs that give too much weight to a small number of stocks and to invest in larger ETFs which are likely to trade more often than their smaller counterparts.
Kosnett goes on to list his favorite pick in each of the following thirteen categories: (1) Big-company stocks, (2) Small-company stocks, (3) International stocks, (4) Emerging-market stocks, (5) Dividend-paying stocks, (6) Energy stocks, (7) Alternative energy, (8) Technology stocks, (9) Health stocks, (10) Real estate stocks, (11) Utility stocks, (12) Financial stocks, (13) Gold bullion. Below, you will find his pick for each category.
1) Big-company – PowerShares Dynamic Large Cap Portfolio (PJF)
2) Small-company – Vanguard Extended Market index ETF (VXF)
3) International – WisdomTree DEFA (DWM)
4) Emerging-markets – SPDR S&P Emerging Markets (GMM)
5) Dividend-paying – WisdomTree Total Dividend (DTD)
6) Energy – SPDR Oil & Gas Exploration & Production (XOP)
7) Alternative energy – PowerShares Cleantech Portfolio (PZD)
8) Technology stocks – Rydex S&P Equal Weight Technology (RYT)
9) Health – Rydex S&P Equal Weight Healthcare (RYH)
10) Real estate – SPDR DJ Wilshire Global Real Estate (RWO)
11) Utilities – SPDR FTSE/Macquarite Global Infrastructure 100 (GII)
12) Financial – ProShares Ultra Financials (UYG)
13) Gold bullion – iShares Comex Gold Trust (IAU) or SPDR Gold Shares (GLD)
For more detailed explanations for the picks, visit Kosnett’s original article – “Getting Past the ETF Clutter”.