How Risky are ETFs?
As a newsletter writer and as an investment advisor who advocates the use of exchange-traded funds (ETFs) as the best tools to get all types of asset-class exposure, I am often asked about the risks associated with such funds. Just how risky are ETFs, and what do you need to know about this risk?
The short answer is that ETFs generally offer more diversification than buying individual stocks. They also offer lower costs than owning mutual funds. So, the only real risk with ETFs is the risk that’s assumed whenever you invest in any equity, bond, commodity or any other asset class.
Of course, not all asset classes or indices are created equal when it comes to risk. There are many market sectors that are far more risky, historically, than others.
In today’s ETF University podcast, I go over many of the trends and circumstances that cause certain areas of the market to be riskier than others. I also show you how to control that risk with ETFs designed to help adjust for circumstances such as currency risk.
Now, if you haven’t checked out ETF University, or simply ETFU.com, then this is a perfect opportunity to do so. And, it is not just risk that you’ll learn about.
The following table shows all of our previous podcasts, along with their respective titles, so you can listen to the topics of greatest interest to you.
| #1 | 11/7/14 | Case Against Mutual Funds |
| #2 | 11/14/14 | Choosing a Brokerage Firm |
| #3 | 11/24/14 | Finding the Money |
| #4 | 11/26/14 | Tips, Terms, Tools and Rules |
| #5 | 12/5/14 | What ETFs Should You Buy? |
| #6 | 12/12/14 | Navigating the ETF Landscape |
| #7 | 12/19/14 | Pitfalls, Mistakes and Missed Cues |
| #8 | 12/23/14 | Building Your ETF Portfolio |
| #9 | 12/31/14 | 10 Action Steps for Becoming a Better ETF Investor |
| #10 | 1/9/15 | Last Year’s Market Winners and Losers |
| #11 | 1/16/15 | The #1 Factor in Your Investing Success |
| #12 | 1/23/15 | Innovations in International ETFs |
| #13 | 1/30/15 | Strong US Dollar |
| #14 | 2/6/15 | Opportunities to Invest Internationally |
| #15 | 2/13/15 | The Power of the Roth IRA |
| #16 | 2/20/15 | Who Needs Banks? |
As you can see, we’ve covered a lot of different topics during the past 17 weeks, and I think investors of nearly every orientation (growth, income, trading, etc.) will find something here to learn about.
So, if you haven’t done so already, check out the ETF University podcast today!
Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.
His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. Read more about Jim Woods.
