ETFs: It’s What’s On the Inside That Counts

By (Tom Lydon),

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Although the exchange traded fund ( ETF ) industry is bigger than it was a decade ago, it's important to remember that not everyone - old hands and newbies alike - knows everything about these products.

The emerging market bond market is accessible through ETFs, but what do you need to know about this area of the business before you dive in? Matt Hougan for Index Universe has put together a list of five things you may not have known, including these:

  1. Emerging Markets: Currency returns are a key driver of the diversification benefit that makes investing overseas so appealing, but you're not getting that currency exposure in some emerging market bond funds. [ Investors Going Global. ]
  2. Corporate Debt: These ETFs hold the most heavily indebted companies. When you buy these funds, which are very appealing right now, just know that these are not large-cap companies in the S&P 500. [ Junk Bond ETFs Are Anything But. ]
  3. Homebuilders: The most popular homebuilders ETF actually has top holdings in Tempur Pedic (NYSE: TPS ) or Williams-Sonoma (NYSE: WSM ). This is a lesson to always know what you own. You can find the holdings for any ETF on our How to Examine ETFs.]

For more stories about ETFs, visit our ETF 101 category .

Tisha Guerrero contributed to this category.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing ETFs
Referenced Stocks: ETF

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