The pace of new ETF launches is already proving brisk this year. That means some nifty new funds may be getting lost in the shuffle. However, that shouldn’t be the case with the WisdomTree U.S. Adaptive Moving Average Fund (WAMA).
Read more: Prepare for a Gold Rebound With This Nifty ETF
WAMA, which came to market in March along with its stablemate, the WisdomTree International Adaptive Moving Average Fund (WIMA), is off to an impressive start. At just over a month old, the domestic moving average ETF has $177.5 million in assets under management. WIMA is starting strong in its own right, as highlighted by an AUM tally of $64.1 million entering the Monday, April 27 trading session.
WAMA and WIMA are refuting the notion that all good ideas are spoken for when it comes to equity-based ETFs. WAMA, the domestic moving average ETF, tracks the WisdomTree U.S. Adaptive Moving Average Index. Obviously, this is an index-based ETF. However, its allocations to stocks and U.S. Treasury bills shift on a daily basis, depending on what trends domestic equity markets send out.
WAMA Makes Moving Average Investing Easy
In technical analysis, moving averages are one of the most important and easiest-to-understand concepts. That only enhances the appeal of WAMA and WIMA. The new ETFs make it easy for investors of all stripes to shift equity exposure depending on moving average signals.
A market participant attempting to do the jobs of WAMA and WIMA needs a lot of capital, technology and time — luxuries not afforded to all investors. Indeed, the functions performed by WAMA and WIMA are important.
“By calculating the MA, the impacts of random, short-term fluctuations on the price of a stock over a specified time frame are mitigated. Simple moving averages (SMAs) use a simple arithmetic average of prices over some timespan, while exponential moving averages (EMAs) place greater weight on more recent prices,” according to Investopedia.
WAMA and WIMA are new kids on the ETF block. Over time, however, the funds could help advisors and investors attain accurate readings on market sentiment. Indeed, these ETFs are potentially useful in multiple ways.
“You can also use MAs to gauge the general mood of the market. Rather than worry about every dip or jump in stock prices, looking to see where the trend is going will help you make more informed decisions without reacting emotionally. MAs work well for both seasoned and beginner investors, aiding them in seeing the bigger picture in the market,” added Investopedia.
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