A Few Good Resources You Should Use
If you’re anything like me, the end of year holiday season’s for spending time with friends and family. But it’s also when I take a look at my investing strategies.
What worked or didn’t work this year? And more importantly, what am I going to do next year?
I’ve got a few ideas I think will be monsters in 2010. I’ll get to those in another article. But here’s a hint… it involves ETFs (exchange traded funds).
If you’re not already using ETFs in your portfolio, I recommend adding them into the mix in 2010.
There’s a reason they’re the fastest growing investment vehicle with more than $744 billion in assets. ETFs are attracting dollars previously invested in stocks, commodities, bonds, currencies, or mutual funds.
I see four big reasons ETFs are growing so quickly.
ETFs provide instant diversification with a single purchase. Similar to a mutual fund, an ETF traditionally holds a basket of stocks. You’re able to buy a piece of every stock in the market, a style of stock, or a sector or industry.
Unlike mutual funds, ETFs are traded throughout the day like stocks. This makes ETFs a better vehicle for active traders than mutual funds. You’re able to buy and sell at specific prices throughout the day instead of waiting for the markets to close. And since ETFs are traded like stocks, you can often buy and sell options on them.
Another advantage is ETFs are tax friendly. Unlike mutual funds, the only time you’ll have a capital gain or loss is when you sell the ETF. Mutual funds, on the other hand, pass along capital gains from the fund’s transactions throughout the year.
Lastly, management fees for ETFs are much smaller than mutual funds. The expense ratio for most ETFs is small because they’re passively managed. They’re set up to track an index and the holding of an index rarely change.
The question I’m often asked by new ETF investors is where do I get my information?
The truth is, there’s no one-stop-shop for all ETF information. But I’ll give you some of the best resources on the internet I use.
First, let me say as the editor of the Sector ETF Trader, I’ve written a few free reports available to subscribers. This is always a great place to start your education.
Another place to begin is Yahoo! Finance. The website is finance.yahoo.com/etf. The yahoo finance ETF education center has a number of good articles. They cover everything from how ETFs work, their tax advantages, and even trading options on ETFs. There’s also a nice glossary of terms you’ll see when using ETFs.
Another good site to look at is ETF MarketPro. The website is etfmarketpro.com. The investor center provides several useful articles much like Yahoo! Finance. But they have a great feature… The ETF list.
With over 700 ETFs available and new ETFs being launched all the time, it can be hard to keep up. Their ETF list is updated frequently and breaks down ETFs into several useful categories. They list them by sponsor, management, category, asset class, exchange, weighting, and position.
Once you’re comfortable with how ETFs work, another great resource is an ETF sponsor’s website.
The biggest ETF sponsor is iShares. They’re the king of the hill in terms of market share. Nearly half of all ETF assets are managed by iShares. Their website is iShares.com.
On their site, you’ll find the iShares fund finder classifies their ETFs in an easy to use format. By selecting a specific ETF, you can view an overview of the ETF, its performance, the current holdings, and a history of distributions. You’ll find similar information on most of the other sponsor’s sites too.
Take a look at adding ETFs into your investing mix in 2010. They’re an easy to use tool for beginning and seasoned investors alike.
Category: ETFs
