Agriculture, Bonds, Commodities, Currencies, Emerging Markets, Energy, Frontier Markets, Funds / ETFs, Metals, Stocks

ETF Due Diligence: Critical Questions And Key Considerations To Make Your Investment Choice Accurate

indexes stripe

By ETFalpha

As a boutique ETF research house we know how important it’s to conduct a proper due diligence process before choosing an ETF as your investment or a building block of a wider investment strategy. Exchange Traded Funds, also known as passive investments, may sound as more simple investment options than hedge funds or mutual funds, therefore the due diligence aspect is very often neglected. In our opinion proper research and due diligence are the key to in-depth understanding what you buy and ultimately a big contributor to your investment success.

We have our own due diligence process which has been already tested successfully, however in this short article we would like to share the widely accessible due diligence approach proposed by BlackRock’s iShares. They recommend to scrutinize ETF’s in the five following dimensions:

1. Provider

2. Exposure

3. Structure

4. Liquidity

5. Costs

So, let’s have a look at each of the dimensions separately and see what are the critical questions and issues to consider before you allocate your assets into an ETF.


01. Provider


02. Exposure


03. Structure


04. Liquidity


05. Costs

These critical questions and key consideration points should be your homework in order not to get negatively surprised at the later stage of your investment cycle. Don’t let yourself get caught into an investment trap and don’t say we didn’t warn you!

Apart from due diligence, we also produce analytical reports dedicated to ETFs where we scrutinize particular funds from different perspectives. Here are some samples of our work (Analyst Report Series) you can familiarize yourself with.

We value your feedback. Please feel free to leave your observations below within the comments section or via our Twitter account: @ETFalpha. Alternatively you can approach us by email:

Important Information Related to this Article

Please familiarize yourself with our DISCLAIMERS every time you engage the site: they’re updated constantly without notice. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. ETFalpha did not own any shares of the mentioned ETFs at the moment of writing this article.


One thought on “ETF Due Diligence: Critical Questions And Key Considerations To Make Your Investment Choice Accurate

  1. Thanks so much for sharing! These are some really great points when it comes to inspecting your potential ETF. In my opinion, the exposure is one of the most important things to ask about. Looking into how discrete/transparent it is can help you know exactly what you are getting into. Plus, it is good to know what will be visible to the public, and what isn’t.


    Posted by Maggie Allen | April 28, 2016, 12:14 am

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Follow Us On Social Media

Google Translate

Our Discussion Groups

Facebook Group
LinkedIn Group

Follow EMerging Equity on

Our Social Media Readers

%d bloggers like this: