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Everything You Need to Know About ETFs

SPECIAL REPORT: A week-long special feature on investing with ETFs--from the basics to portfolio construction to advanced investor knowledge

Holly Cook 4 March, 2012 | 4:52PM

Charting the rise of the ETF may be interesting fodder for industry-watchers, but for investors the more pertinent questions may be: how, when, and why should I use an ETF? Should ETFs replace other holdings in my portfolio? How do I compare ETFs? What details should I know before diving in?

Morningstar.co.uk's ETF Investing Week aims to bring clarity to this fast-growing investment vehicle with a focus not only on what it is, but also what it does--and how ETFs may be used as both a building block in a strategic portfolio and as a key instrument in a tactical investor's toolbox. With help from Morningstar's European ETF analyst team, we cover the basics of these exchange-traded products, imparting our knowledge on how to research and select ETFs, and offering unique insight into ETF portfolio construction and tax implications.

Learn more about ETFs and read the latest Morningstar ETF research at Morningstar.co.uk's ETF Centre.

Monday: ETF Basics
We offer you some beginner information on ETFs.

What is an ETF?
This article was written for absolute beginners who may have never even heard of ETFs. Read on to learn about this increasingly popular investment vehicle.

ETFs: Active vs. Passive & Physical vs. Synthetic
A look at different kinds of ETFs and how they are structured.

A Beginner’s Guide to Different ETF Categories
A look at the other ETFs, which track commodities and currencies.

Taxes and ETFs: A Guide for British Investors
Understanding how ETFs are taxed is crucial to creating an effective investment strategy.

Understanding Morningstar’s ETF Ratings
Learn how to use Morningstar's ETF Star Ratings to help you make better investment decisions.

The History of Exchange-Traded Funds (ETFs)
Worldwide assets under management in ETFs have seen explosive growth over the past decade. But where did ETFs come from? This article examines the origins of ETFs.

ETFs: Can't See the Wood for the Trees
ETFs have many positive attributes, which are outlined in this article by Ben Johnson, director of European ETF research at Morningstar.

Tuesday: Making ETFs Work for You
We explain how to put your ETF education into practice and make these investments work for you.

How to Research ETFs
Using Morningstar's ETF Quickrank will help you find the right ETFs for your portfolio.

Finding the Right ETF
We outline the top three criteria for investors to pay attention to when comparing exchange-traded products.

How to Hone in on the Best ETFs
A guide on the factors to examine in order to differentiate between two comparable ETFs.

Do I Need ETFs in My Portfolio?
There is no 'right amount' of ETFs for an investment portfolio.

How Much Should I Hold in ETFs?
When it comes to exchange-traded funds, asset allocation and diversification matter the most.

International Investing Using ETFs
ETFs can help you gain exposure to exciting overseas opportunities.

ETF Cost Structure Results in Better Performance
ETFs are generally cheaper than traditional funds, which usually results in better long-term performance.

Indexer? Valuation Still Matters
The relationship between indexing and efficient-market theories is more nuanced than many believe.

Are You Overestimating Your Sophistication?
When it comes to ETF investing, sometimes the simplest solution is the best.

Indecisive? Too Much Cash? Use ETFs
Exchange-traded funds and products are useful when investors have too much cash on the table.

9 Tips for Placing ETF Orders
Trading ETFs is not as easy as buying or selling mutual funds. This article shows you how to buy and sell efficiently and effectively.

Using ETFs for Portfolio Construction
Find out how you can use ETFs as building blocks within your investment portfolio.

Creating a Portfolio with ETFs - Part I
Scott Taylor, an IFA at Brilliance Financial Planning, discusses portfolio construction and shows you how to create a portfolio using only ETFs.

Creating a Portfolio with ETFs - Part II 
Morningstar's team of investment consultants have created two all-ETF portfolio examples.

Wednesday: Income Investing with ETFs
We look at income investing strategies using ETFs.

Seeking Safety: The Case for Dividend ETFs
If you're not confident in your stock-picking skills, ETFs represent a good option for dividend seekers.

Why Does My ETF Dividend Fluctuate So Much?
The actions of other investors matter when it comes to dividend yields.

The How and Why of Fixed Income ETFs
Review our webinar, in which Morningstar's ETF analysts delve into the intricacies of investing in fixed income ETFs.

High Yield ETFs Popular in a Low Rate Environment
The ETF industry has helped open up the high yield bond asset class to all investors, but will favourable conditions last?

5 ETFs to Shorten Duration and Enhance Yield
ETF ideas for fixed income investors.

ETF Investing for UK 'Stagflation'
Investors looking to overweight inflation-fighters and non-cyclical equities can do so via exchange-traded products.

ETFs for Tapping Into Emerging Market Debt 
Morningstar's Jose Garcia-Zarate investigates the case for, and risks related to, investing in emerging market debt.

ETFs: A Total Return Approach to Retirement Income
Morningstar's Christine Benz outlines the mechanics and reasoning behind the total return approach to ETF portfolios.

Thursday: Commodity Investing with ETFs
Articles and videos to explain how to gain exposure to commodity and currency markets using ETFs.

Investing in Commodities with ETFs
A basic guide to investing in commodities using ETFs.

Speculating on Agriculture Prices with ETFs
Complex economic and financial issues have been brought to the dinner table.

Top Performing Commodity ETFs
Investing in gold ETFs has paid off handsomely over the last year.

Conventional Commodity Indices May Disappoint
A look at the true drivers of commodity futures' returns shows that popular indices like the GSCI are lacking.

New ETFs Created for Commodities Markets
ETF TIMES: ETFS Launches 14 New Sterling-Hedged Commodity ETFs in London

What is Gold Worth?
The value of the yellow metal is in the eye of the beholder.

Why Add Commodities to a Portfolio?
If you're looking for portfolio-diversification benefits, consider a broad commodity fund over a single commodity tracker.

Commodities Investing Goes Mainstream
VIDEO: Commodities are becoming core portfolio holdings for many professional money managers and also will be seeing increased demand as the world's middle class grows, says Teucrium's Sal Gilbertie

Why Gold Prices Are Misleading
VIDEO: Common gold-valuation metrics, which measure several ratios, are likely to be wrong because gold doesn't have a core value, says State Street's Chris Goolgasian

Friday: Advanced ETF Knowledge
We delve into ETF topics suited to the more advanced investor and discuss the finer details of ETF investing.

The Truth about Synthetic vs. Physical ETP Flows
The "fear of synthetic" may not be enough to explain the underlying market dynamics.

The Potential Pitfalls of ETPs' Intraday Liquidity
It is crucial for investors to understand the sources of ETP liquidity, how to measure it and how to manage ETP transactions in challenging market environments.

Asking the Right Questions About Active ETFs
Everyone wants low-cost, transparent access to the best managers--you just need to ask them.

The Pros and Cons of Advanced Beta ETFs
As the debate between active and passive ETFs rages on, many have voiced their support for a fundamental indexing or advanced beta strategy.

ETP Swap Replication Under the Spotlight
Regulators should look beyond the method of replication when evaluating risk.

Is There a Right Way to Use a Leveraged or Inverse ETF?
VIDEO: Morningstar's Paul Justice explains why these ETFs don't perform the way many investors expect.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Holly Cook

Holly Cook  is Managing Editor of Morningstar.co.uk