The hidden perils of ETFs

You can save money and diversify with these cheap index funds, but watch out for the pitfalls.

5 of 5

5. When ETFs die

The fund industry launched 125 ETFs last year, bringing the total to 819.

Danger: Fund companies are throwing a lot of ETF ideas up against the wall -- one tracks companies with lots of valuable patents -- and not all of them will stick. Over 50 funds shut down last year, leaving investors to find a new place for the cash (and possibly owing capital gains taxes). To avoid headaches, stick to established ETFs with assets of $30 million or more.

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Last updated March 22 2010: 12:03 PM ET

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