With the size of the exchange-traded product market expanding rapidly each year, it is important for advisors to understand exactly what they are purchasing.
When thinking about choosing an ETF, typically the first step is to determine which investment universe you want to gain exposure to. This is usually pretty straightforward. You can choose exposure by size/market capitalization -- typically micro-cap, small-cap, mid-cap and large-cap -- then select domestic or foreign equities and level of economic development (developed, emerging or frontier markets). Investors can also get as granular as choosing individual sectors, countries, or regions.
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