Understand risk factors (see below, Do Exchange Traded Funds outperform the market?)
There are a few standard phrases you’ll see used regularly by investment funds of all types advertising their products. In many cases these statements are required by law regarding all forms of fund investment, and they applies to ETFs as well: ‘Future fund performance may not match past performance.’ ‘Figures for projections given are based on past performance and may vary over time.’ It’s a classic mistake to invest based on past performance. Past performance isn’t particularly indicative of future prospects. Most funds go through good and bad periods. Asset values change, sectors go through boom and bust periods. As an investor, how do I operate my own Exchange Traded Fund investment? In practice, as an investor, you’ve bought units in an investment fund. The fund manager runs the fund, and decides on income allocations, etc. Depending on your knowledge, you can keep track of your investment, buy and sell, as you wish. As an investment, however, one of the factors in investing in Ex
