Individual stocks often fluctuate in value, making diversification a necessity if you want a combination of (relatively) smooth returns and long-term appreciation. 

If you’re thinking about diversifying your portfolio, it’s important to know what diversification can and cannot do: it can mitigate 澳洲幸运5官方开奖结果体彩网:unsystematic risk, but it cannot do much to combat 澳洲幸运5官方开奖结果体彩网:systemic risk. Besides evening out the short-term fluctuations in the market, diversifying your portfolio may increase the chances that you will get exposure to the top-performing assets that can boost your long-term returns.

Investing in exchange-traded funds (ETFs) is one of the best ways to get that exposure.

What is an ETF?

An ETF is a security that is designed to track a basket of assets. As the name implies, exchange-traded funds can be bought or sold on a stock exchange.

The ability to buy or sell an ETF anytime during market hours gives them an advantage over mutual fund shares, which are not traded on the exchanges—making it harder to purchase or redeem shares. ETFs also typically offer lower expense ratios than mutual funds, which can add up over the long run.

What Types of ETFs are Available to Investors?

ETFs track an index, sector, commodity, other assets, or even a specific investment strategy. The U.S. exchanges offer over 2,000 ETFs. Apple famously said, “There’s an app for that.” Well, at least in most cases, “There’s an ETF for that,” too.

To give you an idea of the 🍃diversity ꦏin offerings, there are ETFs that invest in companies that: 

• Meet environmental, social, and governance (ESG) criteria
• Are not sensitive to rising interest rates
• Are actively involved in the metaverse

The above are examples of niche ETF offerings, but a large percentage of the ETF market is dedicated to tracking stock market indexes, large sectors, markets (e.g., developing or emerging markets), and commodities.

With so many ETF options, it can feel like an impossible task to narrow down the list of 2,000+ possibilities. But by considering your time horizon and investment objectives, you can hone in on a solid choice. If you are looking for an ETF that has a good chance of outperforming over the next several years, for example, you may want to 澳洲幸运5官方开奖结果体彩网:invest in an ETF that invests in future-proof companies.

Certain ETFs Offer Growth and Sustainability

In the previous section, we touched on the ability to invest in an ETF that mimics a stock market index. With the S&P 500 澳洲幸运5官方开奖结果体彩网:returning an average of 🔴10-11% from 1926♔ to 2018, countless investors have piled into funds that track the index. But the strong returns can mainly be attributed to a small number of top performers, as a large percentage of companies don’t have long-term staying power.

This does not mean that investors should eschew stock market index investing—it’s impossible to accurately identify all of the winners and losers ahead of time—but it does mean that they should consider diversifying into ETFs that aim to invest in companies with staying power.

The is one possibility. It identifies and invests in companies with strong that indicate they are likely to maintain their competitive advantages far into the future. What is a moat? A moat means that a company benefits from attributes that help them fend off competitors, including switching costs, intangible assets, network effects, cost advantages, and/or efficient scale. According to Morningstar, companies with a “wide moat” rating have competitive advantages expected to last 20 years or more.

In a rapidly evolving economy, it’s important to have investment exposure to the small number of future winꦇners. By diversifying through the right ETF investments, you put the odds of꧃ getting that exposure in your favor.

DISCLOSURES

This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

An investment in the VanEck Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, investing in equity securities, consumer discretionary, consumer staples, financials, health care, industrials and information technology sectors, medium-capitalization companies, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversification and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks.

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a , which contains this and other information, call 800.826.2333 or visit . Please read the carefully before investing.