To The Moon

🌟🌟🌟There are so many ETFs to choose from that finding the right ETF to invest in, can be like trying to navigate a maze. However with the following considerations, choosing the right ETF to invest in, can be made easier and more simplified. 1) Alignment with goals, investment objectives and portfolio asset allocation plans. Choosing the right ETF should depend on our goals, investment objectives, portfolio asset allocation plans. If for example you are just starting to invest and do not know where to start, you may want to consider an index ETF such as the S&P500 ETF like $SPDR S&P 500 ETF Trust(SPY)$ or $Vanguard S&P 500 ETF(VOO)$ This is a good introductory step as it provides for a broad based diversification. If the majority of your holdings are currently in shares, then perhaps investing in a Fixed Income ETF like $iShares 20+ Year Treasury Bond ETF(TLT)$ will help to diversify your equity market exposure. Similarly if you are finding yourself favouring domestic investments like $STI ETF(ES3.SI)$ but unsure how to invest directly in international shares, then an ETF tracking a global index like $Vanguard Total World Stock ETF(VT)$ might provide the missing link. 2) Know The ETF Fund Manager Apart from market movements, how well an ETF performs can also depend on how it is managed. Investing with a reputable fund manager who has experience and a good track record of delivering the ETF performance is important. A Fund Manager with a good reputation and a disciplined approach to portfolio management as well as the scale to have dedicated risk, research and investment teams, is more likely to produce good long term returns. I favour big Fund Managers like BlackRock, Vanguard, State Street Global Advisors as they have a solid track record and experience in managing their ETFs performance. 3) Compare the Expense Ratios and Costs Expense ratios or costs are one of the more straightforward ways to compare ETFs. This can play a crucial role when selecting between similar products. While you cannot control the markets, you can control your investment costs. ETF expense ratios vary across the board as they depend on the fund manager, the market and sector as well as the index being tracked. The lower the expense ratio, the more money we have in our pockets in the long term. An ETF's expense ratio covers the fund's total annual operating expenses. These include management, marketing and distribution fees. Low cost equity ETFs generally have a net expense ratio of no more than 0.25%. Low cost bond ETFs often have expense ratio of under 0.20%. However if it is an actively managed ETF, the expense ratio could be higher than 1%. Another cost to investors is the brokerage fees. Tiger Brokers has one of the lowest brokerage fees. If you predominantly trade in the US markets, Tiger Brokers charges an affordable USD 0.005 commission fee (minimum USD 0.99) and USD 0.005 platform fee (minimum USD 1 per trade). Another cost to be aware of is the bid/ask Spread. This is the difference between the ETF's buy and sell price. It is also determined by market liquidity and what is going on in the market at any given time. The lesser the investor demand, the wider the spread. 4) Discounts and premiums to Net Asset Value An ETF is said to be trading at a premium when its market price is higher than its net asset value (NAV). In other words, you are paying a bit more for the ETF than its holdings are actually worth. In contrast, an ETF is said to be trading at a discount when its market price is lower than its NAV. That means you are buying the ETF for less than the value of its holdings. ETFs that track heavily traded highly liquid markets like SPY ETF typically display only small premiums or discounts. For example SPY ETF might not deviate more than 0.20% from its NAV. In contrast ETFs that trade less liquid markets such as commodities, emerging markets - can display a difference of 1% or more. This is usually due to lack of liquidity but sometimes due to more complex factors. The more you trade, the more important commissions and bid/ask spreads become. This is because you pay for each transaction. On the other hand, the longer you hold an ETF position, the more important its expense ratio is. This is because it is a recurring management fee to be paid to the fund as long as you own the ETF. 4) Consider the ETF structure There are 2 types of ETF structures. They are Physical ETF and Synthetic ETF. A Physical ETF invests in the underlying assets of the index directly to best track the index. These are the most common types of ETFs. An example is Invesco QQQ ETF $Invesco QQQ(QQQ)$ which tracks the Nasdaq 100 Index. In contrast a Synthetic ETF does not invest in assets directly but tracks the index through derivatives which are contracts where the value/price is based on the underlying asset. An example is JPMorgan Equity Premium Income ETF (JEPI) . ETF Structures matter because they can affect the level of risk in an ETF as well as the cost of maintaining it. While physical ETFs are common, it is important to understand the structure of the ETF to pick the best one that meets an investor's needs. 5) Level of Assets Under Management An ETF should have a minimum level of Assets Under Management with the common threshold of at least USD 10 million. An ETF with Assets Under Management below this threshold, is likely to have a limited degree of investor's interest. This can translates to poor liquidity and wide spreads. 6) Trading Activity Trading volume is an excellent indicator of liquidity regardless of asset class. Generally speaking, the higher the trading volume for an ETF, the more liquid it is likely to be and the tighter the bid/ask spread. 7) Tracking Error While most ETFs track their underlying indexes closely, some do not track them as closely as they should. An ETF with minimal tracking error is preferable to one with a greater degree of tracking error. 8) Underlying Asset From the point of view of diversification, it maybe preferable to invest in an ETF that is a broad based and widely followed index. A good example is SPY ETF which tracks the S&P500 Index. In contrast Direxion Daily Bull 2x shares Tesla ETF only tracks 1 stock - Tesla. 9) Market position The first ETF issuer for a particular sector often receives the lion's share of assets before others jump in. It is prudent to avoid ETFs that are imitations of an original idea. With these guidelines, you are now more aware of what you should look for before making your decision on which ETFs to invest in. With careful and diligent research, choosing the right ETF to suit your goals, will ensure better alignment and help to achieve success in investing. One of the most comprehensive all round ETF is $Vanguard Total World Stock ETF(VT)$ . VT tracks a market cap weighted index of global stocks covering both US and foreign stocks. That is 9,693 stocks in just 1 ETF. VT allocates 66% to US stocks, followed by 13% in Europe and another 13% in Asia. I choose VT for its huge diversification and let it do the heavy lifting for me. VT is a great example of a low cost ETF as its expense ratio is only 0.06%. Its Fund Manager is Vanguard, which is the 2nd largest Fund Manager in the world. VT has a substantial Assets Under Management of USD 43.01 billion. VT is a good example of a broad based ETF which ticks all the core fundamentals of a great ETF to invest in. ETFs are great investments for both experienced and new investors. They are low costs and offer great diversification. I believe that ETFs are a great way to invest and would make an excellent addition to any portfolio. @Daily_Discussion @TigerClub @TigerStars @Tiger_comments @CaptainTiger @MillionaireTiger