I wrote about the United States Oil Fund (NYSE: USO) back on April 3, but the fund caught my attention again last night. Earlier this month I pointed out how the 50-day moving average had been a pivotal support level and that if it broke that support the USO could head down to as low […]
What Are ETFs?
The term ETF is short for Exchange-Traded Fund – a security that tracks an index, commodity or basket of stocks. An ETF is somewhat similar to an index fund except that shares of an ETF trade just like a stock on a stock exchange, so they can be bought and sold very easily. ETFs are valuable investment tools because, unlike mutual funds, they can be traded throughout the course of a day.
Most ETFs track indexes. For example, the SPDR S&P 500 (NYSE: SPY) tracks the Standard & Poor’s 500, while PowerShares QQQ (NYSE: QQQ) tracks the Nasdaq-100.
ETFs can be appealing to investors for several reasons:
ETFs allow investors to sell short, buy on margin, and purchase as little as one share at a time
With lower management fees, ETFs are less expensive than mutual funds
ETFs can efficiently help diversify an investor’s portfolio
ETFs allow people to invest in a specific industry
ETF gains aren’t taxed as heavily as those earned through mutual funds
Downsides to ETFs are that, like stocks, they typically have to be bought through a broker; some countries have limited ETF markets; and they aren’t all necessarily designed for long-term investors. While not for everybody, ETFs are a good way for investors to diversify their portfolios at a low cost.
To browse through a comprehensive list of ETFs, visit Yahoo! Finance’s Exchange-Traded Fund Center.
By Rick Pendergraft | Apr 14, 2014
With the market struggling over the last few days and the volatility increasing over the last few weeks, I thought it might be helpful to take a look at one of the major index ETFs to see what is going on with the overall market. I selected the S&P 500 SPDRs (NYSE: SPY) as it […]
By Tyler Laundon | Apr 14, 2014
As this market gets increasingly volatile it’s important to revisit your long-term investing strategy to make sure that you don’t waver. As I wrote last week, and as we’ve all known, a market correction wouldn’t be a surprise. And in fact, it wouldn’t necessarily be a bad thing. If you look back in time you’ll […]
By Rick Pendergraft | Apr 10, 2014
By all accounts, 2013 was a great year for stocks. Even with the S&P gaining over 26% on the year, the biotech sector stood out as a top performer. The iShares Biotech Index Fund (NASD: IBB) gained 60% on the year. The following chart shows the performance of IBB versus the S&P 500 during 2013. […]
By Tyler Laundon | Mar 17, 2014
I’m always intrigued by new small-cap ETF offerings. These investment vehicles are a great way for investors that aren’t yet comfortable owning individual small-cap stocks to gain diverse exposure to this high-potential asset class. And when a small-cap ETF is focused on dividend growers – companies that regularly reward shareholders by increasing their dividends – […]