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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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ETF Insider: Greek Drama Far From Over

Stoyan Bojinov — Sat, 12 May 2012 13:00:24 +0000

Equity markets took a nosedive last week as resurfacing Euro zone debt woes welcomed back the bears on Wall Street. Political turbulence in Greece has sparked a wave of worry, with many fearing that the nation will have to face default unless the opposing parties agree to implement the proposed austerity measures. On the home front, economic data releases remain mixed; the latest consumer sentiment index came in better-than-expected, however, the labor market remains fragile [see also 5 Simple ETF Trading Tips]. Actionable ETF Trade Ideas Last Week’s Actionable ETF Ideas Ticker Position Performance RSP Long -1.2% PHO Long +0.7% TLT Long +1.0% Our picks from Monday’s Insider posted a strong performance during an otherwise dismal trading week on Wall Street. Below, we highlight how our trade ideas fared during the week [sign up for a free trial of ETFdb Pro to get actionable ETF ideas every Monday, as well as [...]

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ETF Insider: Cautiously Bullish At Home

Stoyan Bojinov — Mon, 07 May 2012 16:58:05 +0000

Mixed economic releases coupled with concerning nonfarm payrolls data left many scrambling to take profits, sending major indexes into red territory for the week. With earnings season in the books, investors will once again focus their attention on fundamental data releases along with headlines from the Euro zone. The week ahead looks to be clouded with uncertainty as parliamentary elections across the debt burdened currency bloc may very well spark volatile trading on Wall Street [see also 5 Simple ETF Trading Tips]. Weekly Outlook Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors: Vanguard Small Cap ETF (VB): The small market-cap segment of the U.S. equity market will come into focus on Tuesday as investors digest the latest NFIB small business index data; VB could experience volatile trading if the figure misses the expected reading of 92.5. iShares MSCI Australia Index Fund (EWA): Australian equities have come under pressure [...]

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ETFs To Bet Against Apple

Michael Johnston — Mon, 19 Mar 2012 11:00:14 +0000

Apple (AAPL) has been one of the best performing stocks of the last several years, and has also become one of the most widely followed companies ever. The stock has been climbing sharply higher, recently piercing through the $600 level–a feat that just a few years ago would have seemed impossible. Given the red hot performance, most professional money managers feel as if they have to own AAPL stock–despite some concerns about the current valuation and a potential pullback in share value. Despite the company’s impressive resurrection and status as a leading tech innovator, there are reasons to be a bit nervous about the stock as currently priced [see Seven Reasons To Hate Gold As An Investment]. Brett Arends at SmartMoney and Frank Byrt at TheStreet recently put out a couple interesting articles outlining why it might be time to take gains in Apple (or stay on the sidelines if [...]

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The Truth About Alternative Weighting Methodologies (And ETFs)

Michael Johnston — Tue, 07 Feb 2012 14:00:53 +0000

As indexes have been essentially transformed into investable assets in part because of surging interest in ETFs, many advisors and investors have begun to take a closer look at the details of the methodologies behind the construction and maintenance of these benchmarks. Cap weighting, where the largest weights are afforded to the largest companies, has remained by far the most popular option–thanks in no small part to the low costs and low maintenance requirements associated with this approach. But alternative weighting strategies have been growing in popularity as well, emerging as opportunities to generate excess returns by simply tweaking the manner in which weights are assigned to individual securities [see also The Ten Commandments of Commodity Investing]. There has been a significant amount of debate on the merits of these weighting methodologies, including at a panel last month at the Inside ETFs Conference presented by Index Universe. Many view the [...]

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RSP vs. SPY: 2011 At a Glance

Jared Cummans — Thu, 19 Jan 2012 14:30:01 +0000

SPY has long been the king of exchange traded products. Hitting the market in 1993, this fund has amassed nearly $100 billion in assets making it not only the largest ETF in the world, but also one of the largest funds available to investors. Its ultra low expenses and massive daily volume have allowed it to be both a trading instrument as well as an integral part of long term portfolios. But for the past few years, the fund has been in a stiff competition with its equal weighted counterpart, the S&P Equal Weight ETF (RSP) [see also 12 High-Yielding Commodities For 2012]. Rivalry The rivalry between these two funds can be traced back since RSP debuted in 2003. While SPY has won the battle in some years, others have seen RSP wipe the floor with the ETF top-dog. For those unfamiliar with RSP’s strategy, the fund is comprised of the [...]

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Equal Weight ETFs: Comparing Similar (But Different) Strategies

Michael Johnston — Mon, 05 Dec 2011 14:00:26 +0000

In the universe of equity ETFs, market capitalization weighting strategies are incredibly dominant. The majority of the hundreds of domestic and international stock ETFs available to U.S. investors are linked to cap-weighted benchmarks, and the lion’s share of assets is in products that utilize this well known methodology. But in recent years, thanks in part to the ETF boom, alternative weighting methodologies have been gaining traction. For those seeking to steer clear of cap-weighting and all of its potential drawbacks, equal weighting has emerged as a popular alternative. Part of the appeal of this approach may lie in the apparent simplicity; instead of giving the biggest allocations to the most valuable components of an index, equal weighting generally involves assigning an equivalent allocation to each security that meets the membership requirements for the benchmark. Breaking the link between stock price and index weight eliminates concerns that often are attached to [...]

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Ten Unexpected Observations On YTD ETF Returns

Michael Johnston — Sun, 04 Dec 2011 16:00:16 +0000

With the finish line in sight, it’s fairly safe to say that 2011 will be remembered by most investors as a wild, back-and-forth year that brought plenty of both hope and despair. A hot start raised optimism of a continued recovery after a generally impressive 2011, but the summer months were anything but relaxing; major indexes suffered some of the worst losses since the recent recession. In examining the year-to-date performances for the 1,000+ ETPs that have been around since the beginning of the year, there are a number of interesting figures that jump out, including both pleasant surprises and bitter disappointments–and some that are just plain confusing [the complete, sortable, document is available in ETF Edge--sign up for a free 7-day trial to get full access]. 10. Commodities Holding Up This year has been a tumultuous period for risky assets, especially over the last several months. So I was [...]

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UBS Launches Risk On / Risk Off ETNs

Michael Johnston — Thu, 01 Dec 2011 14:00:49 +0000

UBS, the issuer behind one of the broadest lineups of ETNs available to U.S. investors, continued the aggressive expansion of its product lineup this week with the introduction of two unique offerings. The company rolled out a pair of blunt instruments designed to be used in high level “risk on / risk off” trades, a term that has become popular in recent months as risky assets have exhibited strong correlations with one another and so-called “safe havens” have thrived whenever uncertainty pops up. The new ETRACS Fisher Gartman Risk On On ETN (ONN) will seek to replicate the Fisher-Gartman Risk Index, a benchmark that includes long positions in various risky asset classes such as stocks and commodities and short positions in traditional safe haven investments such as sovereign bonds. The index consists of 150% long positions combined with 50% short exposure, resulting in a net 100% long portfolio: Sector Long [...]

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25 Things Every Financial Advisor Should Know About ETFs

Michael Johnston — Wed, 02 Nov 2011 14:29:08 +0000

The rapid expansion of the ETF industry has been one of the most important developments of the last several decades to financial professionals; as the lineup of exchange-traded products has surged past 1,300, financial advisors now have more tools in their toolkits than ever before to help construct client portfolios. With these new financial products comes a responsibility to understand the various risk factors and nuances of exchange-traded products, and as the industry has expanded rapidly the amount of information to digest has swelled as well. While ETF education must be an ongoing process, there are a number of basics that can enhance overall understanding, identify opportunities and limitations, and generally promote a better experience with ETFs: 1. Volume ≠Liquidity Many advisors and investors like to implement what can best be described as “liquidity screens,” refusing to consider products that don’t have a certain average daily trading volume (25,000 shares [...]

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ETF Database » RSP

101 ETF Lessons Every Financial Advisor Should Learn

Related Posts:

ETF Insider: Greek Drama Far From Over

Related Posts:

ETF Insider: Cautiously Bullish At Home

Related Posts:

ETFs To Bet Against Apple

Related Posts:

The Truth About Alternative Weighting Methodologies (And ETFs)

Related Posts:

RSP vs. SPY: 2011 At a Glance

Related Posts:

Equal Weight ETFs: Comparing Similar (But Different) Strategies

Related Posts:

Ten Unexpected Observations On YTD ETF Returns

Related Posts:

UBS Launches Risk On / Risk Off ETNs

Related Posts:

25 Things Every Financial Advisor Should Know About ETFs

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