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ETFs 106: Analyzing Exchange-Traded Funds

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1.
Would an ETF that you would only consider investing 5% of your portfolio in be considered a specialty holding?
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Yes. A holding with only a 5% weight in the portfolio will be a small determinant of portfolio returns.
2.
One question to ask yourself regarding the suitability of ETFs is whether they should be a core or specialty holding.
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True.
3.
The index replication process is an important consideration when picking between two similar ETFs.
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True. Some ETFs are meant for active traders that offer high trading volumes and tight bid-ask spreads, but a not as complete replication process. Other ETFs offer full replication but not as high trading volume and wider bid-ask spreads. Your decision should then be made based on whether you're an investor or trader.
4.
All ETF fees are low, so there is no need to compare fees between different ETFs.
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False. While ETFs are generally low cost there is a wide range of different fee amounts. When comparing fees remember that the best comparisons are between ETFs in the same category.
5.
Which answer is NOT a fundamental factor that should be considered when evaluating an ETF?
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The ETF's trading volume. Trading volume can be an important factor to look at but it is not a fundamental factor.