How to Use an ETF Screening Tool - dummies

By Paul Mladjenovic

In addition to stock screeners, there are also screeners for bonds, mutual funds, and now exchange-traded funds. Here is a typical ETF screener like many online.

A typical ETFS creener
Courtesy of
A typical ETF screening tool.

With ETF screeners, you won’t find minimum and maximum as much as with stock screeners. There are more varied categories to filter through and different performance criteria.

Keep in mind that most of the popular financial sites (such as Yahoo! Finance and MarketWatch) have good ETF (as well as stock) screeners; most of the stock brokerage sites have search and screening tools as well. Some other popular sites that have ETF screening tools include the following:

Asset class

An ETF is a conduit. When you buy an ETF, you’re really buying what’s in the ETF’s portfolio. The portfolio has assets, and you need to choose what assets you want to find with the ETF screener. The major choices are

  • Stocks: Within the stocks category are sub-categories ranging from small caps to large caps to preferred stocks. Yet another filter in the mix is whether the stocks pay dividends.
  • Bonds: Bonds are a form of debt, and there are different classes of debt, so there are different bond ETFs to choose from. There are bond ETFs that have investment grade bonds (with A or better bond ratings, although some consider BBB the minimum investment grade), and there are high-yield bonds (translation: lower-rated or low-quality “junk” bonds).
  • Commodities: Typically, these ETFs have futures contracts covering the range of commodity choices. There are ETFs in grains, base metals, energy, and so on.
  • Currencies: These ETFs have futures contracts covering currencies ranging from the U.S. dollar to virtually any major currency that trades on global markets.
  • Options: There are few (if any) ETFs that are purely into options, but some ETFs do have an exposure to options as part of their total portfolio, so see if this fits your goals.
  • Other assets: As more ETFs are created, more will have alternatives such as real estate and mortgages. There are even ETFs that have a portfolio of … other ETFs!

Keep in mind that the stock screening process can drill down and help you peruse ETFs in other categories such as preferred stocks, equity, and so on.

Geographic area

Do you want to invest in ETFs that are tied to a geographic area? Maybe you want to invest in India, Africa, or Canada. Maybe the Pacific Rim interests you, or maybe you think that Europe is primed to do well. Many ETF screeners have geographic search criteria.

Inverse and leveraged ETFs

ETFs can make money when stocks or other assets go up, but there are also inverse ETFs that are designed to go up when the underlying assets go down. If, for example, you feel that Nasdaq stocks will crash, then consider getting an inverse ETF that will gain if and when that event occurs.

There are inverse ETFs for stocks, commodities, currencies, and other assets. Keep in mind that inverse ETFs are a form of speculating, so tread carefully here.

Leveraged ETFs are basically designed to double or triple the move of the underlying asset. Say that you’re really bullish on the S&P 500. In that case, consider a “2x” or “3x” leveraged ETF that will essentially attempt to double or triple the underlying asset’s move.

If you want to find out more about inverse and leveraged ETFs, then check out the book High-Level Investing For Dummies (Wiley).

Other considerations

The preceding categories are the basics, but many investors that use ETF screeners find other criteria for finding appropriate ETFs for their portfolios. Some screeners help you find the best ETFs for income or for tax advantages. Still others have criteria to filter for ETFs that have active management (most ETFs have a passive portfolio) or for total returns year-to-date.

You can see other things that may interest you, depending on your personal situation. For example, a category such as “Tax Form” can help you filter out whether you want an ETF that issues a 1099 or a K-1 if tax considerations are important to you. Other categories are “Commission Free” (a transaction cost consideration) and “Active/Passive,” which are tax considerations.