“What are ETF’s?”
Similar
to mutual funds, ETF’s (and their siblings, including ETN’s and UIT’s) are
baskets of underlying securities. The underlying securities may be stocks,
bonds or various other asset types. ETF’s are formed, marketed and managed by
investment management firms. A few of the major ETF management firms include
BlackRock, State Street and Vanguard.
“Why should I use ETF’s versus other
investment vehicles, such as mutual funds or individual securities?”
Similar
to mutual funds, ETF’s provide an immediate reduction in “issuer risk”, i.e.
the risk of default or failure by a single security issuer. Also similar to
mutual funds, ETF’s reduce trading complexity and cost, as they alleviate need
for an investor to buy and sell the individual securities underlying the ETF.
Unlike
mutual funds, ETF’s trade like stocks on open exchanges. ETF purchases and
sales can be executed in real time, just like stocks, whereas mutual fund
purchases and redemptions are executed with the fund manager after market
close, once end of day value of the mutual fund unit shares have been computed.
Opportunity to buy and sell securities Most notably, ETF intraday prices can
occasionally be volatile. Such volatility could lead an investor to trade on
intraday price fluctuations, either intentionally or unintentionally through
the use of limit orders. Mutual fund investors lack the ability to make such intraday
trades. For unsophisticated investors, this restriction could be seen as a
benefit.
Trading
costs and management fees are typically lower for ETF’s than for mutual funds.
ETF’s often provide tax treatment benefit to investors versus mutual funds.
“Why do I need recommendations from
etftopportfolios.com?”
Investors
have hundreds of ETF’s from which to choose. ETF choices span asset classes,
industries and geographies. Each ETF vendor promotes its products, and will
find statistics to entice investors to purchase its products versus its
competitors’ products. Investment media companies publish hundreds of articles
recommending products and approaches, frequently providing conflicting guidance.
Furthermore, ETF vendors are some of the media companies’ biggest advertising
clients, creating inherent conflicts of interest. The result is guidance which
is overwhelming in volume, often contradictory, and with questionable
objectivity.
Our
service was built from the ground up to cut through this noise, and to
objectively identify the best portfolio of ETF’s based solely on historical
performance. While this approach in no way guarantees future performance, you
can rest assured it is based on sound methodology and data, and free of
subjectivity or bias. All portfolios are developed solely based on historical data
and completely automated, AI-based algorithms.
