Exchange-traded funds have taken the investing world by storm, having made it easy for millions of investors to get exposure to the overall stock market as well as niche investment areas. But lately, we've seen one big flaw emerge with ETFs that investors need to be aware of.
In the following video, Fool contributor Dan Caplinger notes that recently, several ETFs have shown big disparities between their share prices and the underlying value of the assets. Dan points out that while this is fairly common among international ETFs, where foreign markets aren't always open when U.S. exchanges are trading, the phenomenon has spread to U.S. bond market ETFs. Dan concludes that a lack of liquidity is always a concern with ETFs, and so you really need to look at the underlying assets before you buy ETF shares.
The article This Little-Known ETF Flaw Could Cost You Big originally appeared on Fool.com.
Fool contributor Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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