“ETF” stands for “Exchange Traded Fund”, which is exactly how it sounds; they are like mutual funds in many ways, but they trade on a normal stock exchange like a stock, with their value being determined both by the value of the underlying assets and the value of the ETF itself.
ETFs have been one of the most popular investment vehicles in the world over the last decade or so, with investors of all types attracted to the low fees, but diverse holdings. Their biggest strong point, that you can trade them throughout the day like a stock instead of just end-of-day like mutual finds, is also their Achilles heel. Read this article to learn why.
ETFs are collections of assets into bundles you can invest in all at once, the most popular ones follow indecies (such as SPY following the S&P 500), which is one way for an investor to build a diverse portfolio without holding dozens of individual positions. However, using financial derivatives and debt, there are also “Leveraged ETFs”, which amplify the risks, and returns, of whichever index it is following. Read this article for a list of Leveraged ETFs.
The Direxion Small Cap Bear 3x is a triple-leveraged ETF offered by Direxion Investments that seeks to negatively triple the returns of the Russell 2000 stock index.
An REITs or Real Estate Investment Trusts own, and often operate, real estate but are publicly traded like stock. Profit is paid as dividend to stock owners.
The U.S. Dollar has lost more than 30 percent of its value relative to other world currencies. Shorting the U.S. dollar and buying other world currency ETFs is one way to make money from this trend.
With ETFs, you can scaled down the size of the transaction for small investors.
Bear ETFs short stocks to achieve their goals. Bear ETFs show gains when the underlying stocks loose value. Bull ETFs use long positions and show gains when the underlying stocks show gains.
The DIA -DIAMONDS Trust, Series 1 ETF invest in a basket of Dow Jones Industrial Average stocks that will track the price and performance of the Dow Jones Industrial Average (DJIA) Index.
The following strategies are used to trade ETFs.
A Spider ETF is a summary of Standard & Poor’s depositary receipt, an exchange-traded fund (ETF) administered by State Street Global Advisors.
Exchange-traded funds that invest in physical commodities such as natural resources, agricultural goods as well as precious metals. Click here for more details!
A “Country ETF” is an ETF that is invested across companies specific to a single country or region. Click on this post to learn more, and see some examples!
An indexed ETF is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
What are the differences between investing in Exchange Traded Funds verses stocks? This article will discuss the pros and cons …
Your goal should be to build and manage a diversified portfolio of stocks and bonds with the lowest possible fees and the greatest possible tax efficiency. ETFs offer seven advantages over index mutual funds: lower cost, greater tax efficiency, better tax management, easier asset allocation, easier portfolio rebalancing, no fraud and you can short ETFs.