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10 Worst ETFs for Your Portfolio


When SPDR S&P 500 ETF, the first exchange-traded fund, made its debut in 1993, Whitney Houston topped the charts, shoppers were snapping up Beanie Babies and Cheers was in its final season. The newfangled gizmo was an immediate success. By the end of its first year, SPDR S&P 500 (SPY), which tracks Standard & Poor’s 500-stock index, held $500 million in assets. But that was only the beginning. The number of ETFs and similar products today has swollen to more than 1,600, with combined assets of $1.8 trillion.

The first ETFs clearly filled a need. They provided investors with low-cost vehicles for tracking well-known market benchmarks such as the S&P 500 and the Nasdaq Composite index, while allowing investors to get in and out of a fund anytime throughout the trading day.

But with success has come excess. Hallmarks of many of the latest exchange-traded products are complexity, narrow focus and heightened risk through the use of leverage. In other words, many of these gadgets are dangerous to your financial health.

With that in mind, we’ve come up with a list of 10 categories of exchange-traded products that you rarely want to put in your portfolio.

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