How to Choose an ETF - 2023

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If you're new to investing and would like to fast track your path to success in the financial markets, then check out this powerful guide.

When it comes to picking the ETF with the highest probability of profit in the long run, it's important to consider the following criteria:

Look for High Volume ETFs

Why high volume? Well it's like looking for the ETFs that has the attention of the "cool kids", or the big/smart money investors. Higher volume means that the fund is likely to move, and possibly move with momentum over time. 

Here's how you can find the high volume ETFs, using the screener below. Click on "Filters" > "Symbol Type", and select only the ETFs. This will show only the ETFs (and feel free to play around). This will show you the volume along with volume*price (which is a good indicator of the popularity of the fund).

Stock screener by TradingView

The High Performing ETFs

Once you have a list (or an idea of) the High Volume ETFs, you can now look at the ones that have historically performed well. Now you've probably heard of the disclaimer of "past performance does not predict future returns", and that is true. It is also worth paying attention to how the fund has performed so far in order to get and idea on how the fund may perform over time. 

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Besides, the past can tell us how traders and investors may behave in the future. Below is a list of popular funds and their annual performance on average since their inception (time that the fund began). 

If you want to make your own calculations, you can do so easily on a free ETF return calculator. Here's how it works.

Scroll down to the "Total Return Calculator", type in the ETF of your interest > "Starting Amount" can be anything (we're more interested in the return) > "Starting Date" can be in the year 2000, "End Date" can be today's date > Click on "Calculate Return" to get the Return, shown below the chart. This will give you an idea on what the annual return could be with the ETF.









When it comes to returns, the idea is to invest in an ETF (or any other asset) that outperforms inflation. Inflation is the hidden and unavoidable tax that affects everybody.

Below is the current Rate of Inflation in the US according to The Bureau of Labor Statistics. When choosing an ETF (or any other asset), it is important to look at whether that asset is likely to outperform inflation. If it is not outperforming inflation, then essentially. Your money and investment is losing value.

USIRYY chart by TradingView

Broad or Sector Based ETF

As a new investor, it is important to pay attention to what sectors the ETF is exposed to. Some may contain stocks that are part of a specific sector, with others may contain stocks from a variety of sectors.

Investing in an ETF that is focused on a specific sector is similar to investing in say a bunch of technology based stocks. You are basically betting on the specific industry (for example here, technology) to surge over time. 

On the other hand, investing in an ETF that is broad is similar to investing in stocks that are part of many different sectors (for example, one stock in real estate while another one is in utilities). This is part of the diversification strategy where the risk is somewhat reduced.

It really comes down to the level of risk you are comfortable with. In order to get a good idea on where you may fit in terms of risk profile, there is a questionnaire that you can take below

Risk Profile Questionnaire

Hopefully this gives you an idea as well as some very useful tools to help you decide on what ETFs to invest in. Feel free to check out any of the other articles that will help you in becoming a better investor.

Where to Invest in an ETF?


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Investing in the Financial Markets involves Risk and the Potential to Lose Your Entire Investment will Always Exist. Only Invest with Money You Can Afford to Lose.

Is This How You Choose and ETF? Will You Use These Methods of Picking? Did I Miss Anything?
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