The best investment decisions don’t involve shortcuts. Therein lies the danger of ultra-popular exchange-traded funds and exchange-traded notes (ETN). The promise of diversified, one-stop exposure to a sector, industry or strategy can obscure the disadvantages associated with these investment vehicles.
Although we prefer to pick individual stocks, closed-end equity funds offer one-stop exposure to specific sectors or security classes. Investors should focus on names helmed by high-quality management teams that have delivered superior returns in up and down markets.
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