FMD Capital Management

Choosing The Ideal Number of ETFs For Your Portfolio

Written by David Fabian, March 08th, 2016

The gravitational pull of exchange-traded funds (ETFs) has created a wave of new investors in these products over the last several years.  Many may be rotating away from traditional high fee mutual funds, while others are looking to simplify their individual stock or bond portfolios.

One question I am often asked by new ETF adopters is: how many funds should they own to create a properly diversified and balanced portfolio?

It’s worth remembering that, at their core, most ETFs are highly diversified investment vehicles.  Many popular indexes own hundreds (if not thousands) of publicly traded stocks or fixed-income instruments.  This means that you don’t necessarily have to work overtime in your search for far-reaching exposure to global markets.

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