ETF investing done right
Money is pouring into exchange-traded funds. They can help your portfolio recover, if you choose the purest kind.

But you might lose money even if you're right about the market's long-term direction. Each day that stocks move differently from your bet - and even a powerful rally will have down days, and vice versa - these ETFs will register losses. It's simple math: When you lose money, you need a bigger percentage gain than you lost to get to even. Say you have a $100 investment that falls 20%. You need a 25% gain ($80 plus $20) to recoup.
As a result, over time they will probably lag their benchmarks, says Morningstar analyst Paul Justice - sometimes dramatically. Take the UltraShort MSCI Emerging Markets ProShares ETF, which aims to deliver twice the opposite of the MSCI Emerging Markets index. Last year the index fell 52%. But the ETF, instead of producing a gain, fell 25%.
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