How do I choose an ETF?

Hi Natalie. Lots to unpack here!

Choosing an ETF first comes down to how you want to invest. Do you want something which is simple and very diversified, like an ETF which covers an entire market like Australia or the US, for example? Or do you want something which is very specific which only invests in technology, or a certain theme?

In terms of performance, it’s counter-intuitive, but you don’t want to just look at past performance. A fund which has performed great for the last 3 years, may perform horribly for the next 3. Same is true for 5 and 10 year periods too. That simply means looking backwards at performance isn’t really helpful when picking investments (I know that sounds very odd). Instead of focusing on this, simply choose investments you believe in, which you are happy to own for the next 10+ years.

In general, the more diversified an ETF is, and the lower its fees, the more likely it is to end up having good long term performance.
That’s why many people choose to invest in broad diversified ETFs with very low fees. If you keep that in mind, it will serve you well :)

Hi Natalie,

There’s a new post on the Pearler blog (which I wrote), discussing this question «How Do I Research What to Invest In?»: https://pearler.com/learn/blog/how-do-i-resea...

Hope you find it useful!
Dave