{"id":36950,"date":"2025-10-17T12:17:01","date_gmt":"2025-10-17T12:17:01","guid":{"rendered":"https:\/\/financialrush.com\/?p=36950"},"modified":"2025-10-17T12:17:01","modified_gmt":"2025-10-17T12:17:01","slug":"etf-mistakes-that-can-quietly-erode-long-term-returns-advisor","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=36950","title":{"rendered":"ETF mistakes that can \u2018quietly erode long-term returns’: advisor"},"content":{"rendered":"

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Prasit Photo | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Demand for exchange-traded funds<\/a> is soaring as investors shift to lower-cost, tax-friendly options<\/a> that are easier to buy and sell. But many people <\/strong>don’t know what they are purchasing, and mistakes<\/a> could hurt their returns, financial experts say. \u00a0<\/p>\n

The ETF market has surpassed $11 trillion<\/a>, near a record high, with $511 billion of inflows during the first half of 2025, Cerulli Associates, a financial services research firm, reported this week.\u00a0<\/p>\n

However, “we are seeing some common mistakes that can quietly erode long-term returns,” said certified financial planner Jay Spector, co-chief executive officer of EverVest Financial in Scottsdale, Arizona.\u00a0\u00a0<\/p>\n<\/div>\n

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More from ETF Strategist:<\/h2>\n
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Here’s a look at other stories offering insight on ETFs for investors.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Investors could soon see even more ETFs<\/a> after regulatory decisions from the U.S. Securities and Exchange Commission in late September. One of the rulings could spark a wave of new ETF share classes of\u00a0mutual funds.<\/p>\n

As the ETF market grows and more products emerge, it’s important to understand how each asset could impact your financial goals, advisors say.<\/p>\n

In the meantime, here are some of the key ETF mistakes to avoid.<\/p>\n<\/div>\n

Following the ‘herd mentality’<\/h2>\n
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One of the biggest ETF missteps is “chasing performance,” which often involves the “herd mentality” of following other investors by funneling money into rising assets, according to Spector.<\/p>\n

In some cases, clients buy ETFs when they are performing well, without considering how the investment aligns with their long-term financial goals, he said.\u00a0<\/p>\n<\/div>\n

Chasing hot themes and ‘trend hopping’<\/h2>\n
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Another common mistake is following the masses to hot ETF themes or “trend hopping,” said CFP Patrick Huey, owner of Victory Independent Planning in Portland, Oregon.\u00a0\u00a0<\/p>\n

“It’s tempting to jump into the newest AI, crypto, or thematic ETF<\/a> after big headlines,” he said. “But these funds are often narrowly focused and volatile.”<\/p>\n

If you buy when the ETF peaks and sell as it declines, “you’re missing the real benefit of steady, diversified exposure,” Huey said.<\/p>\n<\/div>\n

Ignoring ETF expense ratios\u00a0<\/h2>\n
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Another big error is thinking all ETF costs are the same, according to CFP William Shafransky, a senior wealth advisor with Moneco Advisors in New York.<\/p>\n

“I see this all the time with new client portfolios,” and many investors could own the same index, such as the S&P 500, at a lower expense ratio, <\/strong>he said.<\/p>\n

Broad market index ETFs that track the S&P 500 often have an expense ratio under 0.05%<\/a>, Morningstar reported in July. But some funds charge more.<\/p>\n

“The [higher] cost may seem insignificant at first, but that extra fee drag on your return adds up over time and could translate into lost money,” Shafransky said.<\/p>\n<\/div>\n<\/div>\n\n
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