ETF Database » PBP

101 ETF Lessons Every Financial Advisor Should Learn

Michael Johnston — Wed, 23 May 2012 12:00:06 +0000

Exchange-traded funds (ETFs) have burst on to the scene in the last few years, raking in hundreds of billions of dollars in assets and prompting a major shift towards indexing strategies in the process. ETFs have empowered financial advisors (FAs), registered investment advisors (RIAs), Chief Financial Officers (CFOs), money managers, and retail investors to take greater control over their portfolios, pushing down fees and maxing out tax efficiency in the process. While ETFs appear quite simple on the surface, these securities can be quite complex. In order to get the most out of ETFs, there’s a lot that investors need to know about the structure, opportunities, and limitations of these securities. Below we outline just about everything you need to know about ETFs, from the basics to the more sophisticated aspects of these products. 1. ETFs Are Tax Efficient One of the biggest advantages of ETFs is their tax-efficient structure; [...]

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Tax Efficiency Report Card

Daniela Pylypczak — Tue, 10 Jan 2012 12:00:24 +0000

The year-end periods provides the ETF industry with a couple of opportunities to flex its collective muscle; performance comparisons generally tend to favor those products with lower expense ratios–a defining feature of exchange-traded funds. But early January also puts another benefit of exchange-traded products into focus: enhanced tax efficiency relative to traditional mutual funds. The nuances of the exchange-traded structure have the potential to bring additional tax efficiencies to investors thanks to the availability of an “in kind redemption” that ultimately gives investors more control over the timing of tax obligations. Mutual funds, on the other hand, have a nasty tendency to stick remaining shareholders with tax liabilities incurred as a result of redemptions by others–a development that can obviously be undesirable [see Tax Loss Harvesting With ETFs: 6 Ideas To Lower Client Liabilities]. ETFs won’t allow investors to skip out on their taxes, but this product structure can deliver [...]

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ETF Pipeline: Global BuyWrite ETF On The Horizon

Michael Johnston — Thu, 01 Sep 2011 11:00:14 +0000

AdvisorShares, one of the largest issuers of active ETFs, continues to cultivate new relationships and fill the product pipeline with ideas for new exchange-traded products. Earlier this month the company filed details on a fund that would combine a common and long-standing investment strategy with the exchange-traded structure, shedding some light on plans to launch the STAR Global Buy-Write ETF (VEGA). The proposed ETF would be sub-advised by Partnervest Advisory Services [see all the AdvisorShares ETFs here]. AdvisorShares has taken a unique approach to development of its active ETFs; the company has partnered with a number of different sub-advisors to allow asset management firms to deliver their strategies in the ETF wrapper. Buy-Write Strategies The “buy-write” strategy is relatively straightforward, and has been implemented by investors for years. This technique essentially involves combining a long position in equities with a short position in call options on those equities–buying the stocks, [...]

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Five ETF Strategies For A Sideways Market

Michael Johnston — Fri, 10 Jun 2011 14:00:56 +0000

Most investors have a pretty good idea which ETFs will perform well in bull markets (generally any type of risky asset, including equities and commodities) and which will perform well in bear markets (low risk bonds and inverse equity ETFs, among other asset classes). But finding products that have the potential to deliver meaningful gains when equity markets are moving sideways can be a more challenging task. The very nature of such an environment eliminates the vast majority of equity ETFs, and bond funds are also unlikely to show much movement when equities move along sideways. A 0% return on a portfolio is obviously preferable to the losses many experienced in 2008, but no growth can be tough to swallow. No one sets up a portfolio expecting it simply to tread water, and those with little in the way of patience may be frustrated by investments that simply spin their [...]

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ETF Ideas For A Flat Market

Jared Cummans — Mon, 16 Aug 2010 14:44:44 +0000

This year has been a frustrating one for investors, as equity markets came racing out of the gate only to lose steam as much anticipated job creation failed to materialize and much of the developed world found itself facing a massive credit crunch. Every development that seemingly indicates a robust recovery–such as the impressive earnings season–is quickly followed by more discouraging news to keep markets in check. Major U.S. indexes have spent part of 2010 well into positive territory while also dipping deep into the red, currently standing about even on the year. As the summer months draw to a close, many investors are beginning to predict that more sideways movement is in the forecast. There is a growing feeling that while there is not enough fuel for a upside rally, the situation is also not so bleak as to bring on a double dip recession. That creates a unique [...]

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Daily ETF Roundup: PBP Sinks, DBA Jumps Higher

Eric Dutram — Wed, 30 Jun 2010 22:21:13 +0000

After staying rangebound for much of Wednesday equity markets tanked in the final hour of trading, pushing the Dow, Nasdaq, and S&P 500 to losses of more than 1% on the day. These losses came after payroll company ADP reported that private companies added just 13,000 jobs in June, far short of the 60,000 that was predicted by a group of economists. This led many investors to sell shares in the final part of the trading session in order to avoid a possible volatile session in Europe tomorrow as the ECB takes out roughly half a trillion dollars in one-year loans from the market. This helped to push the major indexes down more than 10% to finish the quarter, leaving many investors very nervous over what the market holds for the second half of the year. The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through [...]

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Do You Need A Covered Call ETF?

Eric Dutram — Wed, 12 May 2010 14:36:43 +0000

Mounting fiscal problems in Europe finally spilled over into global markets last week, sending shares plunging sharply lower. At one point on Thursday, the Dow was down close to 1,000 points, with several stocks and ETFs rendered nearly worthless by a still-unexplained “flash crash” began (see Ten Shocking ETF Charts From The “Flash Crash”). Then on Monday, investors awoke to news that the euro zone was authorizing a trillion dollar bailout plan to help stop the contagion from spreading to other weaker markets like Spain and Portugal, giving markets a big boost. With the chaos of late 2008 still fresh in their minds, some investors have tweaked their portfolios in light of recent developments, seeking out safe havens such as gold and Treasuries or sliding into less volatile equities (see Three Low Beta ETFs). Other investors are taking a renewed interest in a strategy abandoned during the recent recovery; the [...]

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Five Twists On S&P 500 ETFs

Michael Johnston — Tue, 27 Oct 2009 07:00:52 +0000

The S&P 500 is one of the most widely-followed benchmarks in the world, a bellweather of the American economy that is included in the Index of Leading Indicators. Composed of 500 of the largest stocks listed in the U.S. (as well as a handful of non-U.S. companies), the S&P 500 has a weighted average market capitalization of approximately $80 billion, and includes companies across all sectors of the economy. With the rise of indexing as an investment strategy, it’s not surprising that S&P 500 ETFs are among the largest and most heavily traded. With a market capitalization of more than $57 billion, the SPDR S&P 500 (SPY) is by far the largest ETF, nearly $20 billion larger than its closest competitor. The iShares S&P 500 Index Fund (IVV) comes in at number four on the list with almost $21 billion in assets, meaning that U.S. investors have nearly $80 billion [...]

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Covered Call ETFs: The “Write” Play Now?

Michael Johnston — Mon, 31 Aug 2009 11:55:27 +0000

U.S. and global equity markets have enjoyed a months-long rally from their March lows, fueled by improving macroeconomic conditions, surprisingly healthy corporate earnings, and renewed consumer confidence. Following this tremendous rally, we are beginning to see indications that the market rally is running out of steam, as many sophisticated investors are beginning to pull out of the market amidst fears that stocks are overbought. Yet there remain many reasons to be optimistic. Unemployment is showing signs of peaking. Consumer confidence is staging a comeback. And most global equity benchmarks are still well below their all-time highs, giving optimists reason to hope that there is more upside to come. Given these conflicting indications, it’s very possible that equity markets will take a pause from their climb higher, but won’t begin to retreat into a “double dip” recession. If the markets do indeed move sideways for a while, ETFs that implement a [...]

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Five ETFs Most Investors Don’t Understand

Michael Johnston — Mon, 11 May 2009 17:48:59 +0000

The majority of ETFs on the market follow the traditional ETF model – tracking an underlying equity or bond index. But as the benefits of the ETF structure become more widely accepted, inflows from increasingly sophisticated have created a demand for increasingly complex funds. Here are five of the more complex ETFs available to investors today, along with explanations of their objectives and strategies. PowerShares S&P 500 BuyWrite Portfolio (PBP): This ETF is based on the CBOE S&P 500 BuyWrite Index, which measures the rate of return of an S&P 500 covered call strategy. This strategy consists of holding a portfolio indexed to the S&P 500, and selling a series of call options, each with an exercise price at or above the current level of the S&P 500. Selling options hedges downside risk if the market falls (since the ETF receives premiums from options that are out-of-the-money), but limits upside returns if [...]

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ETF Database » PBP

101 ETF Lessons Every Financial Advisor Should Learn

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