ETFs, or exchange trade funds, are effectively pools of securities and company assets that are sold through a broker dealer. In recent years, several lawsuits have been filed against brokers claiming that they failed to inform customers of some of the risks involved these investments, particularly the likelihood of long-term losses.
Analysts at the ETF Database recommend that clients thoroughly research the fund before entering into an ETF investment. Investors should be asking what the underlying assets are, how liquid the fund is and whether there's a cheaper option before committing their finances to an individual ETF.
The key to successfully investing is preparation and simplicity, according to Vincent Delisle of Scotia Capital Markets in Montreal.
"By all means, you need to be straightforward," he tells the Montreal Gazette. "In my work, I always look at just 10 sectors. If you start to breaking things down further, it can make your head spin."