ETFs are getting sexier by the day with so many kinds of ETFs being introduced these days. Advantages of ETFs are a well discussed topic, but here are some more reasons why ETFs are so much more cooler!
Submitted: Aug 8, 2007
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View Article: http://creating-wealth.blogspot.com/2007/08/why-are-etfs-so-sexy.html
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Comments Received:
Dave Sanders
(Unregistered)
"Many of the ETFs are Optionable. What does that mean? It means tonnes of opportunities like: leveraging investments with CALLS and PUTS, getting downside protection with PUT calls, earning constant revenue via covered calls & spreads, and you can even short the ETFs. You can use ETF options just like you would do with stocks. Options take investing to a whole new level, and if you are good at it you can not only protect your investment, but you can grow it very well too."
I think is key. I trade options on QQQ and find its great. Not only do I get diversifaction based on the Nasdaq index, but I get a highly liquid market.
Posted: Aug 8, 2007
Steve Campy
(Unregistered)
ETFs are a complete scam invented by Barclays are spread throughout the entire industry. The management fees on these things are ridiculous, and in a less bullish market these will always trade below NAV (QQQQ, for example, traded below NAV from 2001 until May 2007). You will do always do much better with a combination of key companies in the sectors that you want to be in and low cost open ended funds, like those offered by Vanguard.
Posted: Aug 8, 2007
@ Steve Campy The management fees on ETF are extremely low. Mutual funds charge management fees in the 1-2% range while most ETF are below .5%. Where ETF can get you is in the brokerage commissions since you have to buy them like stocks. You can't buy a specified number of ETF every month or you'll get reamed on commissions.
I've used ETFs and think they work well for what I do with them.
Posted: Aug 8, 2007
Expense ratio for common ETFs are very low even compared to Vangaurd mutual funds. Look at the expense ratio of emerging market ETF VWO; it is just 0.3%, much less than its equivalent emerging market MF would be.
However some of the ETFs that implement some complex strategies can be higher and may even have minimum investment amount. But this is because of the complexity of the strategy itself. Eg: Proshares ETF like SH or SEV. I am not sure if there is an equivalent mutual fund for what these ETFs do.
Posted: Aug 16, 2007
