Exchange-traded funds are a great way to start investing for a lower cost. The advantages to investing in ETFs are numerous but so are the number of ETFs. With over 1,500 ETFs available how are you supposed to figure out what the best fit is for your portfolio?
Following are some tools that will help you determine which ETFs are best for you and how they can work together within a well-balanced portfolio. Most are free, but some do offer upgrades to get even more information.
Reuters ETF Screener
Reuters has an ETF screener that is easy to use and allows you to screen for many different criteria, such as fund attributes, return, expense ratio, Lipper rankings and net assets. Once you have a list based on the criteria you want the site allows you to sort ETFs based on even more criteria, including risk measures, price performance and total return performance. In addition to the screen, Reuters also offers a top-performers fund list and a fund news page. (For more, see: ETFs or Mutual Funds: How to Know Which One to Use.)
This site has an easy-to-use interface, where you just click on what you want. Because it is so easy to use and straight forward, it's a great place to start for beginner investors.
Assetcorrelation.com offers the correlations between many of the popular ETF funds. You can look at this information from a time period of one month to five years. It also provides for you the return and standard deviation of each ETF so that you can gauge the risk of each asset and attempt to build a portfolio that is lower in risk but still provides desired returns. (For more, see: Is Bigger Better with ETFs, Mutual Funds?)
ETFdb.com Country Exposure Tool
Looking to add exposure to a specific country but can't find a country specific ETF? Then the country exposure tool at ETFdb.com is perfect for you. It allows you to select the country you want to invest in and it provides you with a list of ETFs that have some level of exposure to that country. It shows you the expense ratio for the fund and the percentage of the fund that is invested in that country. (For more, see: How ETFs Fit Into Your Portfolio.)
For example if you wanted a greater exposure to New Zealand you would click on the country on the map or in the list of countries. It would then tell you that 16 funds have exposure to New Zealand. You can then choose from funds that are 97.24% exposed all the way down to 0.37%, allowing you to get exactly the exposure that you need. You can click on the link to the fund to get more basic information.
The ETFscreener.com is one of the most through and detailed screeners. Like other screeners you can choose category, expense, leverage or no leverage. However unlike others you can do screens on things like relative strength factor, you can add in your own criteria, you can even add market timing rules and backtest your screen. This is not for the beginner ETF investor, this is more suited to advanced investors, technical investors or even advisors. (For more, see: What All Investors Should Know About ETFs.)
ETF Replay is designed for financial advisors but does have some great tools for the individual investor to compare ETFs once they have narrowed down their choices. They have a chart comparison tool, where you can enter up to five ETFs and it creates a graph to compare how they did against each other and what their comparable volatility was. The site also offers new highs and lows data, correlation, dividend yield and total return vs. price return.
While everything discussed here is free, they do offer an upgrade to get even more detailed information and more screening tools. Unless you invest for your career, you can find other sites to cover some of their paid functions. (For more, see: What to Watch Out for When Using ETFs in a Portfolio.)
Morningstar is a website that covers everything from stocks, bonds, mutual funds and ETFs. They do their own analysis, plus provide about as much data on each investment that you can find. They offer both free and premium tools for information, and are geared towards both the do it yourself investor and the professional. Their ETF screener is free for you to use, but you do need to sign up for the free account to run it. Once you have done that you can search and sort by just about every metric or criteria that you would like to.
After you have found the ETFs you are interested in, you can then review all the data on the same site. The free version also gives you access to their analysts opinion on the price value. If you have the paid version of Morningstar you can also add the ETF to your portfolio to see how that would adjust your portfolio fundamentals. (For more, see: ETFs vs. Mutual Funds: The Lowdown on Fees.)
The Bottom Line
There are many great free tools out there to help you find the right ETF portfolio for you. Try a few and find the one that works for you and your needs. Plus remember that the there are always new entrants into this field, so keep your eyes open for new tools coming to market. (For more, see: Why the Top-Performing Fund Isn’t Often the Best Choice.)