October 18, 2007 at 1:00 pm by Tom Lydon
Exchange traded funds (ETFs) are baskets of stocks that trade on an exchange like a single stock, but are modeled after index mutual funds. ETFs give investors tax efficiency and are not actively managed, so expenses are minimal. They also can provide instant diversification, low costs and international exposure. On top of all of that, they offer transparency.
As ETFs have proliferated, the ability to focus on more specialized areas of the market has evolved. That’s wonderful news for investors seeking to get a slice of certain market areas and buy a basket of stocks there. However, it also concentrates the risk that accompanies such specialization and tilts a portfolio away from the broad diversification that makes index investing attractive. Some of the top-performing ETFs for the last three months, according to Rich Duprey for The Motley Fool include:
- iShares FTSE Xinhua/China 25 Index (FXI) - up 43.2%
- PowerShares Golden Dragon Halter USX China (PGJ) - up 31.5%
- Claymore/BNY BRIC (EEB) - up 29.0%
- BLDRs Emerging Markets 50 ADR Index (ADRE) - up 17.7%
- iShares MSCI Brazil Index (EWZ) - up 15.5%
- iShares S&P Latin America 40 Index (ILF) - up 11.5%
- iShares MSCI Singapore Index (EWS) - up 9.2%
Although there are many ETFs to choose from, many of the above popular ETFs have not been around for long. For example, FXI, PGJ, and EEB don’t have three year-returns, which is an important performance milestone. It’s also important to notice that all of these ETFs are involved in international markets, and four of them invest in China, as it’s the world’s fastest growing economy.
For full disclosure, some of Tom Lydon’s clients own EEB and ADRE.
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October 18th, 2007 at 8:17 pm
Hi,
Anyone know how to find a list of ETFs that are RRSP eligible in Canada?
Thanks!
October 19th, 2007 at 11:09 am
We asked our friend and fellow ETFer Richard Kang, and he said Morningstar Canada and Globefund.com might have filters that lead to an ETF list of Canadian domiciled ETFs. Hope that helps!
October 20th, 2007 at 3:19 pm
Anybody know of a Dry Bulk Shipping ETF? Companies such as DRYS, OCNF, DSX,PRGN,GNK would be included.
Thanks
October 22nd, 2007 at 9:34 am
There are no dry bulk shipping ETFs yet….but you never know. Best, Tom