The average quality of ETFs has been deteriorating lately. Further evidence of this comes from a Morgan Stanley study where they found that US ETF tracking error in 2009 averaged 1.25% compared to only 0.52% in 2008. (I found this article through the Stingy Investor site.

Not too long ago we could have summed up the low-cost indexing philosophy by saying “buy ETFs”. Those days are gone. The number of ETFs available has been exploding of late, but their quality is often questionable. Too often they have narrow focus and trade in more exotic investments where trading volume is low.  Read More…


  1. The market is so saturated with filth now that it is hard to find quality jems. You can’t even trust reports on television or online to buy certain etfs without wondering what the true angle is. etfs right now are in the toilet.

  2. They was a time when they were good..not so much now.

  3. Not al ETFs are bad. ADR etfs with offshore interests are still a good investment.

  4. There are now new markets for predictive trading where you can preduct the outcome of every day events such as tropical storms hitting the cost of New Orleans again (Intrade). I find this more fun then the junk be peddled these days by the etfs

  5. I am holding EWD (an etf fund) — a collection of Swedish financials and have been getting killed for the last two years (lost about 50% of its value). My make up is mostly of the financial sector of big and well respected banks and there is my problem.

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