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In the Current Market Situation Bond ETF Is the Way To Go

etf trading — Thu, 29 Oct 2009 11:42:42 +0000

With the current financial downturn traders had to bear good amount of losses, but this is not true for the investors who didn’t let the greed take over their sentiments. Some traders who like to play safe invest in treasury yield bonds. I have lots of friends who had their 401k portfolio heavily invested on the aggressive side naturally they want to make fast money, on the other side I had couple of friends who had invested their 401k portfolio in treasury bonds; so in the current market situation my friends who wanted to make fast money were crying with the losses they had made and my friends who had their money in bonds were not at all worried.

If you do believe in low but steady returns you are definitely going to invest your money in bonds, and for the risky investors out there in the current market situation it makes more sense to rather invest in bonds and play safe. Bond Exchange Traded Funds entirely invest in bonds. Bond ETF possess bonds and it works with different strategies like it may invest in U.S. Treasury bonds, High Yield bonds, from short to long term bonds. Like any other ETFs Bond ETF can also be traded like shares on the exchange during the trading session. Further, like International ETFs there are also bonds available which are being established in foreign countries, traders can take advantage of the rate differences by investing in International Bond ETFs.

Below are some of the popular Bond ETFs available in the market today:

1.) iShares Lehman Aggregate Bond (AGG): most financial securities that invest in bonds considers this ETF as a Benchmark. Based on their investment, these funds are deeply invested in short-term US treasury and government securities.

2.) iShares Lehman Intermediate Government/Credit Bond Fund (GVI): These funds are more inclined towards medium range government securities and credit bonds.

3.) SPDR Lehman High Yield Cond ETF (JNK): These funds are more inclined towards long-term but high interest treasury bonds and government securities.

According to some, Bond ETF is the best option for a complete beginner who has never dealt with trading in securities of any kind, and for the traders who understand the market forces should not invest in bonds. However in the current economic situation I would encourage traders to invest in Bond ETF.

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Don’t Get Depressed with the Current Financial Crisis. Buy ETF Short Instead

etf trading — Wed, 28 Oct 2009 13:11:11 +0000

Exchange Traded Funds which belong to this category lets you take advantage of the bearish trend of underlying index by buying ETF Short. These funds follow the ever so popular style of trading which is short selling, under short selling an investor can borrow the securities from the broker and later buy the same security and return it back to the broker. ETF Short is also known as Inverse ETFs and Bear ETFs. Actually these funds are becoming popular and works perfect for the investors during the ongoing financial crisis.

So if there are still worries about the stock market and there is going to be recession in the economy the rational idea is to short the index. However if a trader does not have a margin account and don’t want to have one, ETF Short becomes the right choice. Unlike Mutual Funds one can buy and sell ETFs on the exchange during the trading session just like ordinary stocks.

Usually Short ETFs can be categorized in to following three types:

1.) Normal Short ETF: In this type of ETFs a trader gets returns equal to the fall in the market i.e. if the market falls by 2% value of this ETF goes up by 2%. Some of the popular Short ETFs are Short S&P 500 ProShares (SH), Short NASDAQ-100 Index (PSQ), Short Dow Jones Industrial Average SM (DOG), and Short Russell 2000 Index (RWM).

2.) Double Short ETF: In this type of ETFs a trader gets double the returns in case the market falls i.e. if the market falls by 2% then the value of this ETF goes up by 4%.

3.) Ultra Short ETF: Some of these Ultra Short ETF offers a trader to get 2.5 times the returns if the market falls i.e. if the market falls by 2% value of this ETF will go up by 5%. Some of the popular Ultra Short ETFs are UltraShort NASDAQ-100 Index (QID), UltraShort Dow Jones Industrial Average SM (DXD), UltraShort S&P 500 Index (SDS) and UltraShort Russell 2000 Index (TWM).

Today traders do not need to worry about the falling markets so either you already are invested in the current market and want to hedge your risk by taking an inverse position or if you believe markets are going to fall you can deal in these ETFs and take advantage of the situation.

Make 6% Per Month in ETFs. Trade only 10 minutes per evening. Click here to learn more.

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Stay Away From Single Company Investment Risk Instead Choose Sector ETF:

etf trading — Sun, 25 Oct 2009 13:02:37 +0000

Exchange traded fund has offered a new perspective to the investors; these funds provide innovative ways of investing coupled with low management fees and expense ratio. Further, ETF has an edge when compared to Mutual Funds because of its feature where ETFs can be traded like stock on the exchange. And like Mutual Funds investors trading in ETFs need not wait for the closing price to trade, ETFs can be traded anytime during the trading session at the ongoing market price.

Several different types of ETF are being offered to ordinary traders. One can keep away from the hassle involved with holding physical commodities or precious metal and can buy Commodity ETFs. Likewise, if one is optimistic about the overall markets they can buy Index ETF and if someone thinks that markets are going to fall then they can buy Index Short ETFs. If the local economy is facing recession then one can invest in the Emerging markets Index ETFs or Currency ETFs of Emerging Markets. One of such products introduced and is very popular amongst traders is Sector ETF; Fund Manager who manages this fund invests money into companies of a particular sector.

If a trader believes that a particular sector is going to perform better based on the current market scenario in the past they used to invest in a particular company which belongs to that sector. Investment of this type becomes risky since you are weighing a huge part of your portfolio into one company. By investing in Sector ETF trader is taking advantage of the whole sector and at the same time staying away from the risk of being heavily invested in a particular company’s stock. With Sector ETF there are sub categories, so there are funds available in the market which invests in companies of a particular sector but based only in one market, there are also some that invest in a particular sector’s companies domiciled locally as well as internationally.

Some of the popular Sector ETF is as follows: Merrill Lynch Retail HOLDERs (RTH): These Funds invest in companies of retail sector based in the United States. Retail HOLDERs is listed with NASDAQ, top 5 holdings of this fund are Wal-mart stores, Home Depot, Target Corporation, Walgreen Company and Amazon.com. Likewise there is Vanguard Information Technology ETF, Select Sector SPDR Fund – Financial, iShares Dow Jones U.S. Telecommunications Index Fund and many more.

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Silver ETF Perfect Way to Hedge Your Risk in Today’s Financial Crisis

etf trading — Sat, 24 Oct 2009 15:00:50 +0000

Silver is termed as a precious metal and over the time apart from being used as jewelry, people have started using and accepting silver in different verity of items. Silver is also being used these days as raw material for making refrigerators, keyboards, phones and silverware. So the importance of precious metal commodity like silver has increased as a hedge against the downward market, and looking at today’s financial crisis and market volatility it becomes even more important for traders to use precious metal ETFs. Further, not only for the hedgers but also for investors looking for returns there has been a steady surge in the price of silver over the years. Reason could be any for a trader to invest but Silver ETF is becoming a effective way of investing in precious metal and not dealing with the hassle of physically holding silver.

Generally there are two types of Exchange Traded Funds that deal in silver where a trader can invest. First type of ETF is where banks or financial institutions actually hold silver and Second type of ETF is where fund managers invest in the futures and options that track the price of silver. Both the types of ETF will move in the same direction as the current cash price of silver. Silver ETFs become a perfect investment for banks or institutional investors looking for short term gain or who wants to use this commodity fund to hedge their risks from other investments for a while. However, there are a limited number of investors who are looking for long term gains out of this precious metal based on its robust historical data and also because they want to play safe.

Some of the most popular Silver ETFs are as follows:

1.) iShares Silver Trust (SLV): This fund is quite old in comparison to others that offer Exchange Traded Funds in Silver, it is also one of the largest of all. SLV is a fund that holds physical silver and keeps the investors free of the headaches associated with holding precious metals. Today iShare Silver Trust holds silver worth $4.54 billion.

PowerShares DB Silver Fund (DBS): Unlike its counterparts this fund doesn’t hold physical silver but it invests in derivatives that track spot price of silver. Futures and options contracts these fund deal in are based on an index managed and developed by Deutsche Bank.

Make 6% Per Month in ETFs. Trade only 10 minutes per evening. Click here to learn more.

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Increase Your Exposure And Diversity By Investing in Commodity ETF

etf trading — Thu, 22 Oct 2009 13:09:28 +0000

Today investor’s exposure towards Commodity trading is greater than ever, thanks to over the years increase in the prices of commodities and also the availability of securities in the market which has made investments easier for common stock traders. Trading in commodity ETF is one of the simplest ways to expose your investments to commodity exchanges as well as have that much needed diversity in your portfolio. Commodity ETFs have pre defined investment in a bunch of commodities where from time to time some commodity investments are removed and some are added as the market situations and opportunities changes.

Commodity ETF can be of various different types however a largest part of ETFs replicate the gains of commodities with the help of investments in commodity futures markets. A great feature of ETF which many of you might be aware about by now which is they can be traded like stock and also unlike mutual funds they can be bought and sold during the market hours. Some ETFs only invest in the commodity derivatives, there are some funds that buy the actual commodity where as there are some that buy stocks of companies that deal in that commodity in some or the other ways. Further, there are funds dealing in multiple commodities which can be a hedging instrument or for the traders looking for diversity in their portfolio.

On a broad scale ETFs can be distinguished into following six classes:

1.) Precious metals
For Example: PowerShares DB Gold Fund ETF (DGL) managed by DB Commodity Services is based on the futures contracts on gold and it tracks overall gold performance.

2.) Natural Gas
For Example: The main goal of this kind of ETF (UNG) tracks changes in the percentage in the NAV which reflects the price of natural gas.

3.) Base metals
For Example: PowerShares DB Base Metals Fund (DBB) based on Optimum Yield Industrial Metals Excess Returns (Index) which includes futures contracts of most liquid and mostly all base metals – aluminum, copper and zinc.

4.) Oil
For Example: PowerShares DB Oil Fund (DBO) again based on Deutsche Bank and this Index is based on futures contracts on Light Sweet Crude Oil (WTI) and it tracks overall Oil performance.

5.) Agricultural commodities
For Example: PowerShares DB Agriculture ETF includes future contracts of widely traded commodities relating to agriculture namely corn, wheat, beans, sugar and wheat.

6.) Other commodity related ETFs: These types of funds invest in multiple commodities as opposed to funds that concentrate on one single commodity.

Make 6% Per Month in ETFs. Trade only 10 minutes per evening. Click here to learn more.

This post via the etf trading blog which is your guide to learn everything related to ETFs trading.

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