As with just about every other facet of the money management biz, the exchange-traded fund (ETF) industry is certainly guilty of churning out products that virtually nobody needs.
Case in point: the iShares FTSE/Xinhua China 25 Index Fund
Other dubious ETFs include offerings that invest in ever-popular (but always highly volatile) gold bullion, business-to-business Internet companies (talk about last year's model), and something called "high yield dividend achievers" (whatever those may be).
All of that said, there are certainly plenty of worthy ETF contenders out there; you just have to know where to look. To that end, I write regularly about both ETFs and plain-vanilla index funds in the Fool's Champion Funds newsletter service.
So, just what separates ETF champs from the legions of also-rans? Good question.
Generally speaking, I'm a fan of ETFs that track venerable indexes such as the S&P 500 -- which provides exposure to such blue-chip bellwethers as Microsoft
The bottom line: For reasons I explain here, even the best ETFs aren't for everyone. And indeed, as outlined above, some ETFs aren't for anyone.
Next up: ETFs -- How to Use Them Intelligently
This article was originally published on Jan. 7, 2005.
Shannon Zimmerman separates the fund industry's wheat from its chaff in his Champion Funds newsletter service. Take a free test-drive. Shannon owns no securities mentioned.