ETFs, or Exchange-Traded Funds or Index Funds, have become popular among investors who don't have time to research individual stocks or who feel 'safer' with a security that is handled by a fund manager. But, a new game has evolved among some investors where ETF holdings are scrutinized and the investor then picks and chooses among stock choices within several ETF funds to create his or her own personalized "ETF Portfolio."

While this method of building a portfolio might make sense for the investor who understands the market, the danger in trying to emulate an ETF fund lies in the simple fact that very few individual investors can afford the number and variety of stocks held within an indexed fund.

ETFs are security certificates that state legal right of ownership over a basket of individual stock certificates. In other words, ETFs are funds that trade like individual stocks (including the ticker symbols) on all of the major exchanges, but they contain a number of stocks within one security. These funds are based on indexes, but some ETFs focus on sectors within these indexes. For instance, you might find an ETF fund that focuses solely on oil or specifically in the housing market. Other ETF funds may focus solely on growth stocks or value stocks or a mix of both. Still other ETF funds, like QQQQ (the Nasdaq 100 ETF), focus on a specific market.

ETFs have clear advantages over traditional mutual funds. Most notably, their annual expense ratios are considerably lower, but they exist nonetheless. They're also more tax-efficient, and they can be traded throughout the day.

The ETF is cheaper if you buy in large dollar amounts infrequently. So, for those who like to trade on a regular basis or who want to invest a regular small sum on a monthly basis, the ETF may prove an unwise investment choice since charges - which may be flat annual fees or a percentage or simply a lower return - will cut into profits. Granted, these charges are minimal when compared to mutual funds, but they create a reason for some investors to examine ETF funds to cull a good "mix" from the ETF baskets.

With that said, the examination of holdings within ETF funds can provide hours - and I mean hours that can turn into days - worth of fun for the person who wants to know more about how to evaluate stocks across several markets and against other index funds. One place to learn how to examine stocks held within ETF or other funds along with regular stock offerings is located online at Stockpikr.

You don't need to sign up at Stockpikr to examine ETF funds or regular stocks. You might read some of the articles posted in the blog located on the site first to become familiar with this site, as it may seem intimidating if you're new to investing. One article about the Dogs of the Dow, for instance, can help you understand how this site shows various equities so that you can examine them at a glance. A link within that story goes directly to a list of 12 stocks that forms a current list of Dow Dogs (Dogs of the Dow is a stock picking strategy devoted to selecting high dividend stocks).

If you take a look at the bottom line in each entry in this list, you'll see ticker symbols under the heading, "People owning [this stock] also tend to own:" This is where the strategizing begins, because you can learn a lot about various stocks through this method. But, you don't go blindly into that good night, oh no. This list merely provides you with a number of stocks that you can investigate before you decide whether they interest you or not, because this list is generated only from the portfolios generated on this site.

In most cases, the stocks listed in this line are pulled from different sectors, different markets, and different indexes. So this site offers a great way to examine a variety within a limited number of stocks.

Another way to approach this site to learn more about how your current portfolio adds up is to plug three stocks into the list on Stockpikr's homepage (you'll be asked to register for free). When you do this, you'll be sent to a page where you can add more stocks to your 'watch' or 'experimental' portfolio. Then, you'll be introduced to other portfolios that hold one or more of the same stocks. "Pro" and "non-pro" advisors provide these examples, and the latter should be taken with a huge grain of salt.

The area that you really want to examine at Stockpikr is located in the top left menu, where you can find the "Latest Pro Portfolios." This is where you'll find the holdings that some ETFs carry in real time. When you click on the "more" link in that menu area, you'll find twenty-seven pages filled with ETF funds. If you click on any one of those funds you'll discover information about the fund, an analysis, and all the stocks that the given fund currently carries.

In addition, you may find comments about the fund's holdings, an addition that can help point you to more resources to study. While I cannot vouch for the validity behind the "non-pro" comments and portfolios, I do know that many financial journalists and pro stock pickers use this site frequently to learn more about any given stock or fund.

If nothing else, this exercise will teach you about diversification. First, that it's smart to diversify; and, secondly, when you can't afford the time or money to diversify like an ETF fund, you might learn about hundreds of available ETF funds so that you can add one or two of these indexed stocks to your portfolio for some variety.

Until Next Week,
Linda Goin

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