The hidden perils of ETFs
You can save money and diversify with these cheap index funds, but watch out for the pitfalls.
1. Index tracking error
Danger: Some indexes are hard to follow exactly. That may be because they have too much in one stock -- the IRS requires funds to be diversified -- or because they hold too many securities. The iShares MSCI Emerging Markets Index Fund holds 439 of the 767 stocks in its benchmark index. In 2009 the fund returned 71.8%, while the index returned 78.5%.
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