The front page headline on CNBC.com today reads “Forget Stocks: Investors Pile Into Exchange-Traded Funds”. More and more investors are beginning to realize what we at The ETF Store have known for a long time: ETFs can provide a more convenient, transparent, cost effective, and tax efficient way to invest across a wide range of asset classes. With ETFs, you can precisely tailor your portfolio with exposure to equities, bonds, commodities, REITs, currencies and even inverse and leveraged vehicles. As has been well documented in many of our previous blogs, with ETFs, you can choose between specific market segments, sectors and industries such as energy, commodities, basic materials and industrial metals. You can even invest in agriculture and precious metals such as gold and silver.
ETFs combine the benefits of stocks and mutual funds into one investment. Because ETFs trade throughout the day, investors can utilize stop loss/limit orders and options – flexibility that mutual funds can’t provide. And because ETFs are baskets of securities, investors can minimize company specific risk – flexibility that individual stocks and bonds can’t provide. With this kind of flexibility, investors are realizing that ETFs can be a much better way to deal with the current turbulent market – they need the ability to stay nimble in this highly complex and risky environment.
ETF assets exceeded $700 billing in September on what continues to be a steep upward trajectory for the ETF industry that many expect to exceed $1 trillion in assets by 2011. As Sean Crawford, a portfolio manager at Barclays, pointed out in the article, “There are a lot more ETFs in different asset classes than (there) had been in the past, and they’re becoming more nuanced. It’s become a pretty compelling investment idea.”
