Equity investors continue to experience a roller coaster ride as a terrible run up to Thanksgiving was followed by a week significant gains in stock prices.
In today’s investing world, many individuals simply choose the assets class (ex. Large cap) they wish to invest in and turn over the company picking to a mutual fund manager or an underlying index through an index fund or Exchange Traded Fund (ETF). However, when choosing individual stocks, an investor has the opportunity to screen out companies that they do not approve of, such as those that sell or promote pornography, alcohol, or gambling.
For many, the benefits of creating a long term diversified index portfolio are well known. In fact, the emergence of ETFs that enable access to small cap international, emerging markets, commodities, foreign currency and many other hard to reach asset classes has helped passive indexers achieve more diversification and for many index professionals, higher returns.
An ETF does not require a certain amount of trading volume in order to be liquid. The underlying securities of the ETF determine its liquidity. Many within the industry do not grasp this reality and are missing out on a lot of quality ETFs.
ETF assets grew $20.8 billion or 3% in August according to State Street Global Advisors. ETF assets now total $661 billion across 755 ETFs. Market Cap ETFs saw the biggest growth in August, increasing $9.6 billion or 6.0%.
US equities rallied 7% last week on stronger than expected earnings reports. The largest broad market ETF, the SPDR S&P 500 (SPY), finished last week at $94.13, up $6.17 or 7% from the prior week’s close.
After the decision to invest in the ever popular market benchmark, S&P 500, investors have two options within the ETF universe for a pure play S&P 500 option, iShares IVV and the SPDR, SPY. It seems that investors have made up their minds but is this decision optimal and which S&P 500 ETF is best suited for which kind of investor?
In an environment where the stock market recovers and the credit crisis is in the rearview mirror, will your investments recover with the stock market, lag behind or remain at today’s levels? The investment tool you are using will make the difference.
Assets in the U.S. ETF industry ended March at $482 billion, up $31 billion or 6.8%. In the March ETF Snapshot report, State Street Global Advisors found that the biggest driver of growth were International ETFs with assets up $10 billion or 12.5%.
After closing at a new multi-year low on Monday, stocks rallied through the rest of the week on the back of reassuring remarks from bankers and administration officials. The broad market ETF SPDR S&P 500 (SPY) closed the week at $76.09, up 12% from Monday’s low of $68.11.