Growth Trumped Value:

Companies have a human like lifecycle. The IPO newborn birth, a fragile microcap infancy followed by the awkward small cap tween years, and then the strapping late teenage to early twenty-something glowing midcap.

In stock market investing, midcap sized companies can furthermore be described in human attributes; as those healthy, strong teenagers to young twenty-something adults. These years coincide when strength, flexibility, and adaptability often peak into our finest athletic human form.

Most investors when asked to quickly name a mid cap ETF would typically respond with the most popular ETF for the midcap space and blurt out the SPDR S&P MidCap 400 (MDY).

But is that the best performing mid cap ETF over several years or more? The short answer is no. The MDY and its index it tracks is a terrific performer. But the real long term outperformance belongs to this off the beaten track

Picking from the multitude of style ETFs is a daunting task. There are as many as 37 in any given style and at least 214 ETFs across all styles.

Why are there so many ETFs? The answer is: because ETF providers are making lots of money selling them. The number of ETFs has little to do with serving investors' best interests. Below are three red flags investors can use to avoid the worst ETFs:

1. Inadequate liquidity
2. High fees
3. Poor quality holdings

I address these red flags in order of difficulty. Advice on How to Find the Best Style ETFs is here.

How To Avoid ETFs with Inadequate Liquidity

This is the easiest issue to avoid and my advice is simple. Avoid all ETFs with less than $100 million in assets. Low levels of liquidity can lead to a discrepancy between the price of the ETF and the underlying value

Finding the best ETFs is an increasingly difficult task in a world with so many to choose from.

You Cannot Trust ETF Labels

There are at least 32 different large cap blend ETFs and at least 214 ETFs across all styles. Do investors need that many choices? How different can the ETFs be?

Those 32 large cap blend ETFs are very different. With anywhere from 52 to 990 holdings, many of these ETFs have drastically different portfolios, which creates drastically different investment implications.

I am sure that large cap value ETFs hold many of the same big stocks such as International Business Machines (IBM), Chevron (CVX) and 3M (MMM). However, investors need to know what else those ETFs hold before they can say they have done their due diligence.

The same is true for the ETFs in any style as each offers a very different mix of good and bad