ETFs: 10 Most Dangerous (Part I)

Editor's note: This is the first of a three-part series this week on 10 ETFs investors should avoid. We begin the first part with the least risky of the group.

NEW YORK (TheStreet) -- ETFs have offered investors unprecedented access to the financial markets. Broad funds like the SPDR S&P 500 ETF(SPY Quote) offer exposure to major benchmarks, and narrower funds like iShares MSCI Emerging Markets Index(EEM Quote) and SPDR Gold Shares(GLD Quote) provide investors exposure to individual commodities and international regions.

As ETF assets continue to grow, issuers are forging into increasingly unfamiliar territory. While these ETFs have unprecedented themes, they also can have unprecedented risks. Many of the more complex and non-traditional ETF strategies are appropriate for only sophisticated investors.

The "10 Most Dangerous ETFs" are funds that are not for the average buy-and-hold investor. As always, potential investors should examine each fund with an eye toward their own goals in order to determine suitability.

10. Elements Benjamin Graham Large Cap Value ETN(BVL Quote).

BVL tracks large, liquid companies like Alcoa(AA Quote), Wyeth(WYE Quote) and Allstate(ALL Quote), but is one of the most illiquid ETFs on the market today. This ETF is one of the smallest of all time, with a market cap of just $1.3 million and a three-month average daily trading volume of 173 shares.

It is the lack of investor interest in BVL, rather than its methodology or holdings, that makes this fund dangerous. Illiquid funds can be difficult to trade in and out of, and for a 0.75% management fee, investors can do better. Avoid the trilogy of unsuccessful Benjamin Graham funds, which includes BVL, Elements Benjamin Graham Small Cap Value ETN(BSC Quote) and Elements Benjamin Graham Total Market Value ETN(BVT Quote).

9. TDX Independence 2040 ETF(TDV Quote).

Target-date ETFs like TDV are designed to give investors investment exposure that is appropriate for their retirement date goals. TDX Independence ETFs offers one generic fund and four specific target date funds with retirement goals of 2010, 2020, 2030 and 2040. As the target date approaches, these funds are designed to shift investor funds from aggressive allocations to conservative allocations.