ETFs Archives - Page 3 of 14 - INO.com Trader's Blog

Currency Hedging ETFs; Why You Would Buy Them

Posted on July 1, 2017March 24, 2021 by Matt Thalman

While there is certainly some additional risk associated with Exchange Traded Funds that offer currency hedging, investors looking for international exposure need to consider currency hedging ETF's as a viable option.

I am not normally in favor of ETFs that increase investors risk by using sophisticated investment strategies which increase leverage or offer hedged protection. These products are 'offering' this added feature at increased cost to the investor and usually more so than that at rather elevated risk levels.

In most cases I would argue that if you need to hedge against something, than why even invest in that sector at all? When it comes to foreign equities, it is hard to ignore the developed markets like Europe and Asia. But, the big risk of investing in those countries today is how fluctuations in the currency will affect your returns.

If your investment increases in value by say 10%, but the U.S. dollar compared to that foreign currency increases by 10%, then you have not made a single dollar. Your entire investment gain was wiped out by the currency exchange rate changing. The opposite can also happen; if your asset declines in value, but so does the dollar, than you haven’t lost anything. Continue reading "Currency Hedging ETFs; Why You Would Buy Them" →

Why ETFs Close And How To Avoid Buying One That May Close

Posted on June 29, 2017March 24, 2021 by Matt Thalman

As Exchange Traded Funds become more popular and more money flows into this asset class, it is inevitable that more ETFs will both open and unfortunately close. Currently there are more than $3 trillion in assets in ETFs spread across more than 2,000 different options to choose from.

In 2016 we saw 216 new Exchange Traded Funds. But we also saw 58 funds closed last year. While there can be a number of different reasons funds are closed, the bulk of ETF closures occur because of one of the following three reasons; a weak ETF issuer, low assets under management, or a low rank within its industry.

If you understand why these are the three main reasons an ETF will close, you will be able to avoid buying ETFs that show similar traits. Furthermore you will likely save yourself a big head-ache, and more importantly a lot of money. Continue reading "Why ETFs Close And How To Avoid Buying One That May Close" →

Exchange Traded Funds Are Becoming More Popular Because of This One Undeniable Benefit

Posted on June 24, 2017June 23, 2017 by Matt Thalman

The vast majority of American investors do so through mutual funds, but that trend seems to be changing for the better because investing for the masses is getting a lot cheaper.

Data from 2016 indicated that over half of U.S. households invested in mutual funds and the industries total assets under management were $16.34 trillion at the end of the year. Over the past few years net cash inflows to mutual funds have been shrinking and even turned negative in 2015. In 2007 cash inflows to mutual funds hit an all-time high at $879 billion, which makes sense because this was the peak of the market before the crash caused by the housing crisis. In 2009, 2010, and 2011 cash inflows were negative, -$146 billion, -$282 billion and -$96 billion respectively.

In 2012 cash in-flows returned positive and hit $200 billion, but the industry has seen declining in-flow ever since; $177 billion in 2013, $104 billion in 2014, a negative $101 billion in 2015 and even worse a negative $229 billion in 2016.

It was easy to see and understand why mutual funds experienced cash flow decline in 2008, 2009, and 2010 as the market was falling and investors were scared. But the fact that less money is moving into mutual funds while the stock market in general has increased the past few year's means there is likely a larger force at play. Continue reading "Exchange Traded Funds Are Becoming More Popular Because of This One Undeniable Benefit" →

ETFs For Those In Their 50s

Posted on May 2, 2017March 24, 2021 by Matt Thalman

So you are now just a decade or so from retirement and don’t want another 2008 market crash to wipe out our nest egg, forcing you to work for longer than you are planning. Finding safe investment options is a goal, but at the same time you don’t want to be too conservative because you do need to continue realizing capital appreciation so your nest egg can support you during your 'golden years'.

The balance between safety and growth is more difficult than one may think. If you get too safe, the growth will lag and you may not have a large enough retirement account. If you get too focused on growth, you may be taking on more risk than you should, which could leave you vulnerable to a big market crash.

While Exchange Traded Funds offer diversity, I personally don’t like very many of the mixed portfolio options available today (a fund that holds a combination of investment options such as stocks, bonds, RIETS, MLP's, currency, futures, etc.) and especially don’t like the 'age-based target funds' offer through many 401(k) plans and other mutual fund companies. Now I want to make it clear I am always a proponent of a well-diversified portfolio and I believe that idea holds true more so for those in this age group than investors who are younger.

With that being said, investors in their 50's should be thinking more about buying a few different ETFs, as opposed to the one-stop shops. I have found that the one-stop-shop ETFs typically tend to be either too conservative or too aggressive and this causes them dramatically trail the market returns or be way too exposed to a market pull-back. Continue reading "ETFs For Those In Their 50s" →

A Very Interesting New ETF, The 'Short Squeeze' ETF

Posted on April 29, 2017April 28, 2017 by Matt Thalman

On March 21st shares of The Active Alts Contrarian ETF (NASDAQ:SQZZ) began trading. SQZZ is the first ETF of its kind and opens the door for investors looking at investments from a slightly different angle. SQZZ is in a nutshell a 'short squeeze' Exchange Traded Fund.

First I will explain how shorting a stock works and what a 'short squeeze' is and then I will discuss SQZZ and why I like it.

What Does It Mean To 'Short' A Stock and What's A 'Short Squeeze'

If you don’t 'short' stocks very often, the concept of a 'short squeeze' and how this ETF will make money may be a little confusing. But I will start at the beginning and try to explain it all.

First, when a stock is sold 'short' that means the investors believes the price of the stock will move lower, not higher. If you buy stocks believing the share price will be higher in the future, what most people typically do, that is called going long on a stock. Hence, the phrase, 'going short' a stock when you think the share price is going to decline. Continue reading "A Very Interesting New ETF, The 'Short Squeeze' ETF" →

Tag: ETFs