ETF timespan etc

[umeca74]

when you buy a bond, you know that it will last max till its expiry date, then you must do something else with your money

what about ETFs, is there any general principle or does each ETF offer a different termination policy? (e.g. the VWRD that everyone talks about, is it time constrained?)

I am trying to setup a "buy and forget" passive portfolio and want to set out some general triggers that would make me take note. A ETF stock termination is an obvious event that I must do something about my portfolio

what other things should I consider periodically to double check that my passive investment is in good order? A tracker fund should closely track whatever it is meant to track, so if it doesn't, then it is a bad sign. Anything else major to keep in mind?

thanks

ps. newbie question!

[Lootman]

Concepts like expiry, timespan, time-constrained and termination don't apply to ETFs. They are simply a type of fund and, like other fund types such as investment trusts and open-ended funds, they theoretically will last forever. I say theoretically because some split-capital investment trusts have maturity dates when the shareholders then vote whether to roll over or cash out. And any fund can be closed in certain circumstances. But an end date is not generally a feature of a fund in the way that it is with a bond.

So most ETFs persist and behave as if they are permanent. That's subject to commercial viability and ETFs are sometimes wound down if they fail to reach or maintain an economic size. But such closures are usually with the more fringe, narrow or eclectic varieties. A major market ETF from an established provider like iShares, Vanguard or State Street SPDRs will endure. Whilst the ETF market as a whole is now about $3 trillion in assets and so isn't going anywhere.

ETFs should report their tracking error, which shows the degree of fidelity to its benchmark. They are typically close and not a concern. Costs should be looked at but typically an ETF will be cheaper than other funds and is a key reason for their appeal. You should look at bid-to-offer spreads but they are usually tight as well, again for the major providers and indices.

Personally I think that anyone starting out now with investing should build a core of ETFs before branching out into shares or more active strategies.

[umeca74]

thanks