Decided to invest in stocks and exchange-traded funds (ETFs), but unsure where to start? You’re not alone – it’s a position in which many would-be investors find themselves. With tens of thousands of stocks and ETFs available worldwide, how can you possibly hope to sift through them all to find appropriate and attractive investments? Well, one solution is investment screening. ✨

Screening is the process of filtering investments based on certain self-set criteria. The goal is to arrive at a much shorter and more manageable list of stocks and/or ETFs as candidates for further analysis. Investment screening’s a very useful activity – and one commonly undertaken by individual and professional investors alike.

How you approach screening depends on how you approach investing in the first place. “Top-down” investors start by looking at big-picture economic or thematic trends; they tend to invest in ETFs tracking entire sectors or markets rather than individual stocks. A top-down screening process therefore focuses on finding ETFs that offer exposure to these areas. “Bottom-up” investors, on the other hand, principally pick individual stocks based on companies’ “fundamentals”. They usually screen for shares whose basic financial characteristics look attractive – and may therefore merit more in-depth scrutiny… ⚖️

There’s no right or wrong approach – and those outlined above aren’t mutually exclusive. Many investors have a healthy mix of stocks and ETFs in their portfolios. But these different types of investment demand different screening processes. Lucky for you, however, we’ve got both covered below.