Twelve Things You Need to Know About ETFs

By Ben Steverman - 2012-02-27T22:16:37Z

Illustration by Dennis Pacheco

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Why are there so many ETFs?

"There is a race to slice and dice the market," says Dave Nadig, director of research at IndexUniverse.com. More ETFs mean more tools for investors trying to diversify their portfolios and profit from targeted industry trends. Think you can make money off demand for timber? There's the Guggenheim Timber Index ETF (CUT) that holds 25 paper and forest products companies. Prefer broad stock exposure with a smoother ride than the market? Try the PowerShares S&P 500 Low Volatility Portfolio (SPLV).

One drawback of so many choices, says Joe Jennings, an investment director at PNC Wealth Management, is that sorting through them takes some expertise.

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