The 5-Minute ETF Checkup: Is Your Portfolio Ready for 2025, Reader?

Hi Reader,

Welcome to The Money Series, and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

If you’ve been following this newsletter for a while, you’ll know I’ve previously covered the basics of Exchange Traded Funds (ETFs) and why they’re a popular investment vehicle. If you’re new here or need a refresher, I recommend starting with this primer to get up to speed on the fundamentals.

Now, with recent market developments — from shifting U.S. tariff policies to concerns over slowing economic growth — investing in 2025 feels more complex than in previous years. The current volatility can make even seasoned investors second-guess their strategy.

As usual, here’s my stance: stick with a long-term view. If you’re not actively trading or chasing short-term gains, don’t let headlines derail your investment goals. Trying to time the market rarely works, and short-term price swings are part of the journey. Also, remember that you only lock in a loss when you sell. Until then, it’s just a ‘paper loss’. Always ensure your emergency fund is in place before investing, as your investments should be money you won’t need to touch for a while.

That said, ETFs offer an efficient way to diversify across sectors or entire markets. But not all ETFs are created equal. Here are a few key things to evaluate — most of this information can be found in the ETF’s overview page or fund factsheet on the issuer's website.

☑️ The Fees (expense ratios). With passive investing, you want the fees to be as low as possible. The less you pay in management costs, the more of your return you keep.

For example, ETFs tracking the S&P 500 typically have expense ratios ranging from 0.03% to 0.1%. That said, your choice might also depend on the platform experience, brand trust, or available features. Just ensure that whatever you're paying, you're getting good value for it.

☑️ Fund Size (Total Assets). A larger fund size often means better liquidity, which helps you buy and sell units at prices close to the market value.

As a guide: if you’re investing, say, $10,000 into a fund that has $1 billion in assets, you’re likely to enjoy smoother execution and tighter bid-ask spreads (lower costs) compared to a niche ETF with just a few million in assets.

☑️ Accumulating Vs Distributing. This refers to what happens to the dividends the fund earns:

• Accumulating ETFs automatically reinvest dividends back into the fund

• Distributing ETFs pay dividends directly into your account

Neither of them is better - it depends on your investment objective and preference. If you’d prefer to have our dividends reinvested automatically without them hitting your account, then choose accumulating ETFs. Otherwise, if you want your income payouts, go with distributing ETFs.

☑️ Method of Replication. An ETF simply seeks to mimic the performance of an underlying index. To do this, there are two methods

• Physical replication: The fund holds the actual stocks in the index

• Synthetic replication: The fund uses complex financial products such as swaps to match the index’s performance.

There are pros and cons to both, however, I prefer physical replication because it is easier to understand, more transparent, and less risky.

Below is a snapshot of Vanguard’s S&P 500 (Accumulating) ETF:

The snapshot shows the key details that can help a prospective investor decide if the fund is suitable for them: Accumulating status, objective, market price, ongoing charge (fees), fund size, and risk rating.

For more information on a specific ETF, check out the ETF’s ‘Key Investor Information Document’ — a simple summary of the fund’s features, fees, and risks. You’ll usually find this (and more) under the “Documents” section on the fund’s webpage.

If you are interested in comparing ETFs for investment, here is a resourceful website I found - Justetf.com. It allows you to screen, compare, and analyze ETFs across markets, strategies, and providers.

Reflect on This:

• Do you invest in ETFs? Or are you just starting to consider them?

Reply to this email to drop me a note — I’d love to hear your ETF strategy (or help you build one).

Till next week, I am rooting for you, money-ly!

Dee

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Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.