Tracking ETF’s
ETF’s or the Exchange Trade Funds are buzzing with activity. One of the reason for their increasing popularity is that they have the advantage of both the Mutual Fund and can be traded like stocks! They can also be called as Index Fund as they track the performance of a specific bond market or Index. The first ETF to hit the market was SPDR’s or spiders and they reflect the performance of S&P 500. Later came the cubes, or QQQQ. All in all there are about 150 ETF’s which range from ETF’s reflecting bond market or even track the price of gold. One other advantage of ETF is that expense ratio for most ETF are lower.
ETF can be used for both long term and short term investing. Their feature of high flexibility and low expense ratio make them a good replacement for Mutual Bond. But the disadvantage is that they reflect the performance of Index. Including them in one’s portfolio helps in covering the market and at the same time in diversifying one’s investment and at a low expense.
Another important aspect of trading via ETF is that you can take advantage of a particular market niche the minute you are aware of the same. The advantage of ETF is that you can trade as per the market tandem or you can buy and hold if you are interested in long term investment!
Now let us analyse the present trend of some of the active ETF’s which are SPY and QQQQ
SPY technical shows an 18.73% gain. Please note that SPY reflects the S&P Index.
In case of the Cubes or QQQQ, the gains seems to be 28.84%. The cubes reflect the NASDAQ index.
Guess ETF satifies all the types of investors from the safe to the adventrous for the simple reason they combine the features of both the mutual fund and shares. But also the disadvantage lies in the same reason that since they would be reflecting a particular index.
-The Business Team
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