As the number of ETFs and ETF issuers grows at a breakneck pace and the focus of many products continues to narrow, it's a challenge to address methodology and liquidity when composing a portfolio. Simply comparing short-term performance among various ETF in any given sector often misses pitfalls such as liquidity and depth. Investors may find themselves paying up for a fast-moving ETF that looks good on paper but trades poorly in the open market.
According to Frank in a recent Fidelity Independent Adviser interview, such a hybrid assists investors in tackling both security-specific and systematic risks, both of which ETFOX addresses. "I am a student of Markowitz and the modern portfolio theory, which has helped me combat market risk by using ETFs," Frank said. "I am also taking security-specific risk out of the equation." ...
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