ETFs: A Screened List

This screened ETF list is based on a combination of features that are often requested by conservative equity investors:

• funds with history and reasonable liquidity
• acceptable expense ratios for the type of portfolio
• not too much volatility for the return
• some current yield
• better total returns than bonds

The funds in the list are not recommendations. They are simply idea possibilities for do-it-yourself investors who may find the particular screening criteria useful.

The funds do not represent a full spread of the asset classes which we believe should be in a well designed portfolio.

The universe from which they were filtered is the entire database of hundreds of ETFs at www.IndexUniverse.com.

Comments

[Richard Shaw]

“Seasoning”:

A much longer list of funds would be generated if the three-year data requirement were modified to include index funds tracking indices that themselves have three-years of data.

We believe that three years of “seasoning” is an important selection factor in a world with so many choices, but a new index fund following an established index with its own published history of three years or more can reasonably be seen as “seasoned” for three years.

[billb]

What figure is "reasonable" liquidity in your opinion?

[Richard Shaw]

Personally, I like to see a rapidly moving tape for investments I make or make for others.

For this screen I was more forgiving. I used the 1-minute charts and wanted to see all or most minutes with trading activity. I did it visually without a bright line test.

There are many newer ETFs with interesting objectives, but with so little trading that you may wait too long for a limit buy to execute and maybe longer for your limit sell to execute. Market orders on thinly traded ETFs are not a good idea.

It becomes a personal matter, but the best situations would allow you to exit whenever you please. You might also find unattractive Bid-Ask spreads in cases where trading is sporadic or limited.

[Richard Shaw]

Bill (BILLB),

I should have added that reasonable size is also determined by the investor's bit size. Someone who wants to put $10,000 into a position has different criteria than someone who wants to put $100,000 or $500,000 into a position.

I certainly would not be willing to be more than 10% of a single day's trading, and would prefer to be closer to unobservable in the volumes.