ETF News 101

New Inflation Blog

2011-01-25T13:27:00.000-08:00

Hey all,

I just launched a current inflation rates blog, and just wanted to update the readers here in case they were interested in learning about inflation. Our first article is definition of inflation.

The Disadvantages of EFT's

2010-05-19T00:33:00.000-07:00

While ETFs have many advantages, they may not always be the best fit for your investment portfolio. Before you make any ETF trade, first consider these disadvantages to make sure they are the best fit for your portfolio. – About.com

Because a ETF is traded like a stock, it means that there are the same fees as stocks so this can cut down on the profit.

One point that has been made is that the international markets can be tricky to invest with when it comes to ETF’s they require a close eye.

EFT’s are also bought in large quantities so the costs can be greater, most EFT’s are not traded as frequently as stocks and this can be related to a regional because they represent several investments and this can result in inactivity.

Because EFT’s are a fairly new region of trade it is not for new investors and may take some digging to understand. Also that it because you are buying in bulk some of your investments could be quite large. Some have raised allegations’ that the difference in the EFT and the actual price of what they represent can be different so it is hard to pinpoint where the actual prices lay.

One disadvantage of EFT’s is that you must pay a fee to buy and sell them, this is probably the single biggest downfall, you must regain your fees in profit and then some to come out ahead, again this is why most buyers are looking for large processes not in small amounts here and there because you will have to really pick the profitable ones can get just plain lucky to stay ahead if you are buying in small random amounts.

The ability to trade these EFT’s in and out during the day can lead to a “fire sell” where investors try to trade when they are low and sell when high but hot spots tend to be used up and then sold for a loss.

The Advantages of ETF's

2010-04-30T13:00:00.001-07:00

When there is a large demand for these the price will increase for a short period of time over the ETF’s cost per share, this gives rise to investors to buy more units and sell off parts that are not. The ultimately means that the premium value is greatly reduced.

ETF’s are also vary tax-efficient due to the fact that the capital gains are mostly paid at the end sale. This is a good option because what would be paid thought out is instead allowed to accrue interest and therefore is a benefit. What the gain is obviously depends on the portfolio but if exploited can result in a gain.

Another advantage is that you can arrange your ETF easily. We have already talked about buying ETF’s in baskets so it stands that when you buy, you buy from one place and don’t have to pull parts from different places. You view it in one place, manage it in one place and because you are working with a bank or brokerage you have online options already available.

ETF’s can’t be manipulated. They are openly traded, where anyone with a portfolio can jump in. this may seem bad but really the more buyers the higher the cost is driven up and thus translates into more profit. They also show the price of the market at that moment which can translates into real-time investing strategy.

ETF’s trade like stocks, this is a advantage because unlike a mutual fund there are investing strategies that can be utilized like short selling. ETF’s allow a investor to buy a ETF at a certain price and then sell it in the same day.

The reasons for the popularity of ETFs are easy to understand. The associated
costs are low, and the portfolios are flexible and tax efficient. The push for
expanding the universe of exchange-traded funds comes, for the most part, from
professional investors and active traders. - James E.
McWhinney

Types of ETF's

2010-04-28T15:20:00.000-07:00

There are several types of ETF’s, in fact there is no limit to the actual amount and this is controlled by many variables, investors, the market, prices and soon. So how do you decide which one fits your best interest?

"Finance is the art of passing money from hand to hand until it finally disappears."
-Robert W. Sarnoff

"An index is a collection of stocks (known as a basket) that represents a sector, industry, region, or stock market. The stocks within the basket are usually either price-weighted or market-weighted" - About.com

1.United States Market Index ETFs
This is probably the ETF that you are most concerned with. These are some of the most traded ETF’s in the market. The point of these is to keep up with a index.

2.Foreign Market Index ETFs
We aren’t alone in the idea of ETF’s and it isn’t exactly new either. The idea or something similar has been around since 1989. If you are looking to invest abroad then these are the ticket. Keep in mind that foreign markets are different so your investing strategy may change.

3.Sector and Industry ETFs
These deal with a certain type of product. Some examples are gold, oil, and drugs. You can simply buy one type instead of getting a whole basket of different companies.

4.Bond ETF’s
There are many of these types’ available, overseas governments here at home and also overseas corporations.

5.Commodity ETFs
These are almost the same as Industry ETF’s only you are looking at a part of the market. Keep in mind that when it comes to ETF’s you are not actually buying a product. As in you are not buying gold and getting it shipped to you. You are simply investing in gold prices.

These are only a few ETF’s; there are many types out there. In fact you could say that there are type’s with-in types. The idea is seemingly new due to its sudden rise and many investors are making ETF’s a part of their investing strategy.

What is an ETF?

2010-04-27T14:06:00.000-07:00

An ETF is basically something that doesn’t exist, except on paper. Think of it this way, you own a part of an idea. Have you ever received a flyer in the mail that invited you to go on a cruise? You will get to go along for the ride if you only set through a seminar that regales you to buy a part of a resort. It’s a package deal and that is a stepping stone for us to understand these things.

The term putting all your eggs in one basket is very true here. An ETF is basically a basket, the best way to explain it is that you have a container, and several companies of close to equal value pace there “wealth” inside be it stocks, gold, silver, oil ect.... you then can buy and sell these in large quantities.

These large blocks are known as creation units. The U.S. Securities and Exchange Commission explains it this way. Investors do not buy Creation Units with money. They are bought with securities that are close to the ETF. Buying these is usually done by large firms.

You are not investing in one company but a index of funds. This article by Yahoo explains it well:
“Exchange-Traded Funds, or ETFs, are index funds that trade just like stocks on
major stock exchanges. Want to invest in the market quickly and cheaply? ETFs
are the most practical vehicle. They help the investor focus on what is most
important, choice of asset classes.”

ETF’s trade instantly not like stocks where the price is set at the end of the day, they are becoming popular among many types of investors. ETF’s are handled by a market specialist, these are extremely qualified individuals that handle the baskets.

The index is then sent to a designated bank for safekeeping. Whenever the buyer retrives the ETF he/she can then sell it as they see fit. One thing that keeps them going is that each step along the way gets part of the income of the ETF.

How to Invest in a Gold ETF

2010-04-06T19:10:00.000-07:00

This article has been moved here.

Welcome to a Blog About Exchange Traded Funds

2010-04-05T02:09:00.000-07:00

Exchange Traded Funds (or an "ETF" for short) is one of the most popular investments in our current economic system. In order to provide a comprehensive source of information, we've decided to launch this website to provide news and blog updates on ETFs.

Topics for this site will include:

Gold ETF Information

Oil ETF Information

High-Yield ETF Information

Natural Gas ETF Information

Silver ETF Information

Later on, we're also planning on launching another website -- this website is just the introduction. We'll also have a newsletter, a special news section for the website, as well as other sections that will help you make the right choice when you try to make money with an ETF. Good luck!