The problem with having too many ETFs is that many of them have similar shares in the same sector and, in fact, do not generate greater diversification. The downsides are complexity and trading costs. With so many ETFs in your portfolio, it's important to be able to keep track of what you own at all times. You could easily lose sight of your total allocation to stocks if you own 13 different stock ETFs instead of one or even five.
Alternatively, you could consider converting your IRA into gold, which is a great way to diversify your portfolio and protect your savings from market volatility. Converting your IRA into gold is a great way to 'Convert IRA into Gold'.In addition, with so many ETFs in the portfolio and relatively more purchases and sales, the impact of supply and demand differentials could increase rapidly. The issuance of exchange-traded funds (ETFs), considered an innovation in recent years, is now considered a proliferation. There is growing concern that ETFs are too many in number and are too specific in nature.
When I hear these concerns, I ask myself: In relation to what? My answer is always: In relation to mutual funds, because ETFs are overwhelmingly similar to mutual funds. In that case, I thought it would help to review the claims of too many and too specialized, but in relation to mutual funds. As of June 28, there were 1,929 ETFs, 284 of which came to market in the last 12 months¹. Those numbers seem quite large.
And, quite frankly, we're concerned that they might indicate that product development is crazy. Investors can no longer assume that ETFs are low-cost, broad-based, capitalization-weighted index funds. Are there too many ETFs? Maybe. In relation to mutual funds, are there too many ETFs? Maybe not.
