ETF Evaluation Checklist: What to Look For

ETF Evaluation Checklist: What to Look For

• Check the expense ratio — prefer under 0.2% for broad index ETFs

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  0.03%–0.15% is common for S&P 500, total market. Avoid over 0.5% unless thematic.
• Verify what index or strategy it tracks

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  S&P 500, Russell 2000, MSCI World. Know what you're buying.
• Review tracking difference (ETF return vs. index return)

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  Should be very small for plain-vanilla index ETFs. Large = inefficient.
• Check average daily volume and bid-ask spread

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  Low volume = wider spreads = higher implicit cost. Popular ETFs are tight.
• Look at top 10 holdings — avoid unintended concentration

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  Tech-heavy? Sector tilt? Make sure it matches your intent.
• Confirm it's not leveraged or inverse (unless you know the risks)

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  Leveraged ETFs decay over time. Not for buy-and-hold.
• Check for overlap with existing holdings

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  Two S&P 500 ETFs = duplicate. Consolidate or diversify deliberately.
• Understand the tax treatment (structures vary)

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  Most US equity ETFs are tax-efficient. Some bond/commodity ETFs have quirks.
• Compare to similar ETFs from other providers

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  Vanguard vs. iShares vs. Schwab. Same index, different costs.
• Read the prospectus summary if thematic or active

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  Thematic ETFs (clean energy, etc.) often have higher fees and concentration.