The best ETF

I will explain how I select the best ETF for my investments. But first I want to explain how I will not select my ETF’s. Especially beginning investors make this mistake in choosing a particular investment product.

With investment funds many people made the same mistake and now many investors are switching to the better and cheaper ETF’s they may be tempted to make this mistake again. As you will know there always are lists that show the ETF’s with the best return in the past year.

It is very tempting to get on board these ETF’s but that could be a very risky and dangerous strategy. Behind every high mountain top there lies a deep ravine. A couple of years with high returns makes me very cautious.

I distrust the best ETF in a list

Investment funds were always very responsive to the charm and power these lists radiated. It was just a matter of starting 10 small funds with high risks. Most of these funds would not meet the objectives but the 1 or 2 that did where propelled to the top of these return lists and then the money came flowing in.

Today I see that these lists of best ETF’s are gaining more and more popularity. What strikes me the most is that the most complicated ETF’s with the highest risk profiles always top these lists. I am not blind for the underlying risks of these ETF’s and I stay away from them.

What I do before I select the best ETF to buy

First and foremost: I do not start with the ETF itself. I constantly follow the movement of financial markets and I will delve into everything what has an impact on financial markets. I thoroughly look for the best possible investment opportunities. Whenever I think an opportunity arises I will get into the backgrounds of this opportunity.

To give an example: Suppose I would have become very positive about the global steel industry. Then I start researching for things that could back my positive feelings. After that I will try to found out which companies would benefit most of this positive effect I forecast.

Maybe that would be steel industries themselves but also ore mines would be interesting or a combination of both of them. Maybe subcontractors would benefit more? At the moment I have a clear and complete picture of the opportunities and effects in this market I will start searching for the best ETF that fits right into the opportunities I forecast.

How I will find the best ETF

When I know where to invest I will have to select the best ETF  that suits my needs. I pre-selected a number of ETF providers that I favor and I will go to their websites looking for the best suited ETF.

I will compare the several ETF products these different providers offer and I will select the best one. In the preceding years I selected the best and most suited 137 ETF’s that I am using now as my standard ETF’s.