From Yahoo Finance: 2025-05-26 08:00:00

Exchange-traded funds (ETFs) have changed investing, but a new Morningstar report warns that most ETFs are not worth it. Only 461 out of 4,000 ETFs may be smart, long-term investments. Stick to larger funds with proven track records and reputable asset managers like Avantis, Vanguard, and BlackRock.

Morningstar’s analysis aims to guide investors toward good ETFs by filtering out risky options. Smaller ETFs may struggle to attract interest and could be shut down, leaving investors with capital gains taxes and a need for a new strategy. Lower-ranked asset managers tend to charge higher fees and develop speculative ETFs that may not provide long-term value.

Be wary of new ETFs that don’t meet Morningstar’s criteria, especially those focused on cryptocurrencies, single stocks, or niche themes. Many smaller providers lack the track record and stability of larger, more established funds. Stick to funds with at least $1 billion in assets and solid track records to minimize risk and maximize returns.

Investors should be cautious when considering ETFs, as some may not be reliable long-term investments. Stick to reputable asset managers and funds with proven track records to minimize risk and maximize returns. Watch out for high fees and speculative ETFs that could lead to losses rather than gains in the long run.

Read more: Most ETFs Aren’t Worth Your Money