How to choose an ETF?

Just like other investments, choosing an ETF depends on your required asset allocation, financial goal, risk preference and time horizon. Choosing an ETF depends on what kind of asset allocation you want to achieve in your portfolio by adding the ETF to it since ETFs are available for different kinds of asset classes like equities, bods, real estate, commodities. First decide on the asset class for the ETF.

Decide on the kind of diversification you want to achieve and the index you want to track. An ETF tracking a broad market index is suitable for achieving maximum diversification with lowest risk. If you’re willing to take risk and want exposure to niche market segments, sectors or countries, choose a specific ETF.

Look at the ETF’s portfolio to understand the exposure it