ETFs short for Exchange Traded Funds have revolutionized the world of investing. ETFs was the most revolutionary financial innovation that took place in the last two decades of the 20th century. Today, ETFs are the most popular form of investment. ETFs give you the best advantages of the world of stocks and mutual funds. Are you interested in investing in ETFs in 2010 than read this article.
So what makes ETFs superior to stocks and mutual funds. You see, when you invest in a few stocks, your portfolio is not hedged. This is why most of the people invest in mutual funds that give them diversification. But mutual fund shares can only be sold or bought at the end of the day when the mutual fund NAV (Net Asset Value) is calculated. The next day when the trading starts, the market might have changes and this NAV may already be stale. But you cannot dump the mutual fund shares. Mutual funds also come with front end and back end fees known as loads plus management fees. So what to do, invest in ETFs. ETFs trade just like stocks,you can buy or sell ETF shares anytime of the day. You can go short on ETF shares anytime unlike stocks that have the uptick rule preventing shorting. At the same time, an ETF provides you with the advantages of a mutual fund. Yes, diversification but with very low fee something like 0.7% as compared to 2-4% for most of the mutual funds.
ETFs are basically a basket of stocks or assets that are designed to mimic a certain market index. It can be the Dow Index, S&P 500 Index, NASDAQ Index, any commodity index or for that matter any sector or industry index.
You can now find ETFs that mimic foreign markets. There are ETFs that mimic the Euro markets, emerging markets, regional markets, individual markets and more. You want to profit from the economic development in China, invest in an ETF that mimic the Chinese stocks. This makes the world of ETF investing quite versatile!
So what can be the best ETFs for 2010? You will have to do your own research. But let me give you an example of the potential of investing in Foreign ETFs. Suppose, you had $10,000 at the start of 2009. You invested in the Dow Diamonds Trust ETFs. At the end of the year, you would have made a profit of 16.86%. Not bad, huh! But suppose, you had invested in a Foreign ETF like the iShares MSCI Brazil Index ETF, you know how much profit you would have made by the end of 2009. A whooping 96.84%. Some people are saying that Brazil will be the best investment for 2010. Do your own research. But when these experts talk about Brazil, they say it will be even better than China and India. They say that Brazil is now the 9th largest economy in the world and it has got more advantages as compared to China and India. Do your own research and discover what will be the best investment for you in 2010.
Whatever, ETFs investing has many advantages over stocks and mutual funds. With the variety ETFs that have been developed over the last decade, the options are unlimited now. Now, you can invest in Inverse ETFs. Inverse ETFs mimic an index in an inverse manner. If the index goes up 2%, the Inverse ETF will go 2% down. This way, you can profit from a market downturn without even shorting. You can even find Leveraged Inverse ETFs. If the index goes up by 2%, the Leveraged Inverse ETF will go down my a multiple of 5 to -10%.
Explore the exciting world of ETFs in 2010. Do your study and reseach, you will be able to find many exciting ETFs for 2010!
Author Resource:-
Mr. Ahmad Hassam has done Masters from Harvard. Discover Chris Rowe's Internal Strength System the ultimate Stock, Options and ETF Course that can make you rich in 2010. This is the exact system that had made Chris a millionaire while still in his 20s. It has 4 modules and going through it is like watching a Hollywood Movie. Learn ETF Trend Trading!
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