Agriculture, Bonds, Commodities, Currencies, Emerging Markets, Energy, Frontier Markets, Funds / ETFs, Metals, Stocks

ETF Due Diligence: Critical Questions And Key Considerations To Make Your Investment Choice Accurate

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By ETFalpha

As a boutique ETF research house we know how important it’s to conduct a proper due diligence process before choosing an ETF as your investment or a building block of a wider investment strategy. Exchange Traded Funds, also known as passive investments, may sound as more simple investment options than hedge funds or mutual funds, therefore the due diligence aspect is very often neglected. In our opinion proper research and due diligence are the key to in-depth understanding what you buy and ultimately a big contributor to your investment success.

We have our own due diligence process which has been already tested successfully, however in this short article we would like to share the widely accessible due diligence approach proposed by BlackRock’s iShares. They recommend to scrutinize ETF’s in the five following dimensions:

1. Provider

2. Exposure

3. Structure

4. Liquidity

5. Costs

So, let’s look at each of the dimensions separately and see what are the critical questions and issues to consider before you allocate your assets into an ETF.


01. Provider


02. Exposure


03. Structure


04. Liquidity


05. Costs

These critical questions and key consideration points should be your homework in order not to get negatively surprised at the later stage of your investment cycle. Don’t let yourself get caught into an investment trap and don’t say we didn’t warn you!

Apart from due diligence, we also produce analytical reports dedicated to ETFs where we scrutinize particular funds from different perspectives. Here are some samples of our work (Analyst Report Series) you can familiarize yourself with.

We value your feedback. Please feel free to leave your observations below within the comments section or via our Twitter account: @ETFalpha. Alternatively you can approach us by email:

Important Information Related to this Article

Please familiarize yourself with our DISCLAIMERS every time you engage the site: they’re updated constantly without notice. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. ETFalpha did not own any shares of the mentioned ETFs at the moment of writing this article.

About ETFalpha

Chief ETF Strategist & Co-Founder at EMerging Equity


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