I totally agree. While the ETF industry is creating new fancy ideas every day, you should only stick to those ETFs that track a broad segment of the market.

As to that investment experts' warning about ETFs defying the principles of classic indexing, I'm pretty much on the same page.

I think indexing is most effective when you invest in indexes that track very broad swaths of the market. By buying, say, the entire stock market through a total stock market ETF or the entire bond market through a total bond market ETF, you get broad diversification at very low cost.

But these days ETF purveyors are slicing and dicing the market into ever-smaller shares. You can buy a sector, like tech stocks, or even narrower slices of a sector, like biotech or software.

One new "sector rotation" ETF will even move in and out of different sectors for you. That's great if you really think it's possible to know the right time for getting in and out of different sectors, or if you want to use these smaller niches to custom build a portfolio.

I have my doubts about how many investors (or ETFs, for that matter) can effectively time sectors and about how many people are up to building a portfolio using small specialized building blocks like subsectors. I guess I've seen too many investors get burned in the past jumping into hot industries and sectors just in time to see the sector go down in flames.