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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.

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.

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Take Informed Decision Keep a Track of ETF Performance:

etf trading — Sun, 18 Oct 2009 08:53:58 +0000

Exchange-traded fund (ETF) is an important instrument for traders to consider while preparing a diversified portfolio. There will be an ETF for any type of investors following their own different strategy, so if a trader has short term goals or long term goals they can find a suitable fund. ETFs are so flexible that more and more number of people from normal investor to an expert trader all are trying to gain ample knowledge about how to trade in ETFs.

Like Mutual Funds, ETFs can provide exposure to whole markets like the Dow Jones, international Indexes like Asian indexes, a particular sector like renewable energy and currency and commodity ETF make it possible for anyone to invest which was in the past only accessible to the traders of futures and forex.

Even if your broker suggested you a particular ETF or you found out about an ETF opportunity from any other signals it always makes sense to find out for yourself about ETF performance. There are several ways you can find out about how ETFs are performing

You can subscribe for ETF Newsletters: There are plenty of ETF newsletters available out there, apart from sending you the latest news of ETF these newsletters also send weekly or monthly performance of some of the top gainers and top losers from the list of available ETFs.
If there are some ETFs that would like to buy and you are using a trading software or web based system you can sort out these ETFs and keep a track on these ETFs. Looking at their performance you can take an informed decision on either to go long, go short or just look at some different investment.
There are also several websites like MSN Money, Google Finance, Yahoo Finance which would have detailed information on list of all the available ETFs and how is their performance based on their one month returns, three months returns, six months returns, one year returns, three years returns or any historical data one would want to analyze.

So once you know how ETF trading works don’t just jump into the unknown waters, keep a track of ETF performance find out what are your short and long term financial goals and accordingly make an informed decision.

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

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Take Advantage of ETF And Dividend Paying Stocks At the Same Time By Investing in Dividend ETFs

etf trading — Sat, 17 Oct 2009 16:59:34 +0000

ETFs with dividends have attracted investors looking for steady income from a fundamentally strong company as opposed to investors looking for high risk and high returns investments. Generally, Dividend ETFs are those funds that have invested in companies that has good track record of paying decent dividends. The menu of these types of ETFs is increasing but not all of these funds are alike, and a trader needs to look at his current portfolio or follow his risk appetite and financial goals for deciding on either to invest in high dividend paying ETFs or other ETFs which claims to pay much higher returns based on growth seen in the value of their Net Asset Value.

Some of the examples of Divided ETF are:

1.) Power Shares Dividend Achievers (PFM): is a portfolio where the fund has invested in group of diversified dividend paying companies. Amongst these companies some have increased their dividends from last twenty two years on an average and annually by 12% from last ten years. Top five companies where PFM has invested in today are Wal-Mart Stores, Inc. (4.97%), Johnson & Johnson (4.77%), International Business Machines Corp (4.7%), ExxonMobil Corporation (4.67%) and AT&T Inc. (4.66%).

2.) Power Shares International Dividend Achievers (PID): this portfolio tracks the dividend growth of international companies which are listed in the American exchanges as ADRs over a period of five years. Top five holdings of this portfolio is Banco Bibao Vizcaya Argentaria SA ADR (4.47%), Vodafone Group PLC ADR (3.18%), CRH PLC ADR (3.09%), Southeast Airport Group ADR (3.03%) and National Grid PLC ADR (2.77%).

3.) Power Shares High Growth Dividend Achievers (PHJ): is a portfolio of hundred dividend paying companies which includes companies that has the highest dividend growth rate annually for 10 years. Top five companies where this funds have invested are Wal-Mart Stores Inc. (4.66%), International Business Machines Corp (4.45%), PepsiCo Inc. (4.31%), McDonald’s Corporation (4.02%), Johnson & Johnson (3.92%).

Since the olden times when traders started investing in stocks listed on the exchange, Dividends have been a vital basis of returns out of stocks. If tax laws are not given importance dividends become a crucial aspect for many investors portfolio. So this is a great option for all the traders out there who wants to invest in ETF and wants ETF dividends.

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

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