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Quick Take: ETFs Won't Replace Stock Pickers

NEW YORK ( TheStreet) -- Despite the growing popularity of exchanged-traded funds, Shundrawn Thomas, head of FlexShares from Northern Trust, told TheStreet's Gregg Greenberg it will not eliminate individual stock picking.

It can be difficult selecting specific companies for investment, so ETFs have become a viable alternative for investors, he said. But now there is something different -- smart beta funds, which Thomas said are different from typical index funds.

Smart beta funds have the explicit purpose of implementing a specific strategy, whereas traditional funds track the entire performance of broad-based indices. This leaves investors exposed to a lot of different risks of which they might not be aware.

While iShares and State Street offer similar services, Thomas said there's always room in the marketplace for something different.

For instance, FlexShares offers the Global Upstream Natural Resources ETF (GUNR), which focuses on investments in energy, timber, agriculture, and water. This unique fund has drawn investors' interest because it's not a common strategy among other ETFs and it offers true diversification.

Regarding bonds and fixed-income funds, Thomas said that while they're "not dead," investors should think about why fixed-income is used, which is for steady, consistent payouts.

He added that investors could look to diversified dividend funds to supplement income and diversify from fixed-income.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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