QUICK TIP - Are thematic ETFs Like the Railroads and Telegraph?
In the US alone, the ETF sector has exploded into a $5 trillion industry. The number of funds has blossomed, which means that there are many funds that offer increasing specificity and focus. Thematic ETFs aim to isolate a target niche of the market. They can be narrow or relatively broad in scope. Many offer exposure to sectors that have been previously unavailable to retail investors. And often they are created to respond to investing fashions.
In this Quick Tip, Morningstar Product Manager Mark Lamonica explains how thematic ETFs can often be compared to the telegraph (the Victorian Internet), railroads and fibre optics. At the time they had a compelling story, but the businesses that benefited from them were not necessarily the ones providing them. I love hearing strongly held opinions and it's worthwhile for beginners to understand that you are often being marketed to, rather than being provided with options to increase your investment returns.
The complete episode and blog post can be found here: https://www.stocksforbeginners.net/blog/morningstar
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