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What are the Invesco PowerShares? All you need to know about

What are the Invesco PowerShares? All you need to know about

Invesco PowerShares (previously PowerShares Capital Management) is a Chicago-based investment management firm that oversees exchange-traded funds (ETFs).   Since 2006, the company has been a subsidiary of Invesco, which markets the PowerShares product. PowerShares funds were founded in 2002 and use quantitative indices as a benchmark.  There are more than 200 PowerShares ETFs available right now. The PowerShares QQQ (Nasdaq: QQQ) is designed to imitate the NASDAQ-100 Index. The PowerShares QQQ is one of the most popular stocks on Wall Street.   PowerShares ETFs also invest in commodities, diverse stocks, and small and microcap firms. Through an ETF, the PowerShares DB Commodity Index Tracking Fund, or DBC, established with Deutsche Bank, individual investors can participate in things. The PowerShares DB Oil Fund (DBO) covers the crude oil index.  Invesco was the first company to launch an intelligent beta ETF in the market. It is one of the top 4 ETF providers in the United States.   The company has over $ 288 billion in assets under management in ETFs. The exchange-traded funds also come with various strategy options to choose from.   Different types of ETF strategies employed by the company are  Factor investing   Fixed-income factor investing  Equal weight investing   Quest for income Access commodities   Low volatility   Momentum solutions  Fundamental investing   Pure EBeta suite   Pure style   Conquer Currencies   Bulletshares ETFs  BulletShares ETF products are created on basis of the basic concept of bond laddering. Bond laddering is the practice of accumulating bonds with varying maturities in the same portfolio.   The goal is to diversify and spread risk along the interest rate curve to protect against erratic rate movements. There will not be a long lock-in period in any bond if the maturity dates are staggered. This method is used by risk-averse investors who choose income overgrowth.  It is a fixed-income ETF. The firm also provides a variety of innovative ETFs.  Source: Pexels The six-step method is used to create these ETFs.  Step 1:  Start with an innovation - The foundation of these products is the NASDAQ-100 and NASDAQ NextGen 100 indexes, which provide access to innovative companies.   Step 2: Exclude non - ESG activities, like companies whose business activities are incompatible with ESG principles, such as controversial weapons or tobacco products.   Step 3: Remove controversial companies - Each company must have a rank of four or lower on a 5-point controversy scale (lower is better).   Step 4: Screened for risk - Each company must be ranked lower than 40 on a 100-point ESG risk rating score (lower is better).   Step 5: Company weights are adjusted are to be tilted toward companies with more attractive ESG scores and lastly, innovation with ESG criteria. The result is two new indexes that our products track, the NASDAQ-100 ESG Index and NASDAQ NextGen 100 ESG Index  Examples of such innovation ETFs are US EQUITY Invesco ESG NASDAQ 100 ETF and US EQUITY Invesco ESG NASDAQ NextGen 100 ETF.  Along with such innovative ETFs, the company also provides ETFs that track blockchain companies and bitcoin cryptocurrency.   Invesco Alerian Galaxy Crypto Economic ETF and Invesco Alerian Galaxy Blockchain users and Decentralized Commerce ETF are the company's funds. Invesco Alerian Galaxy Crypto Economic ETF targets the crypto economy's critical segments—miners, enabling technologies, buyers and crypto trusts, and exchange-traded products (ETPs).   Decentralized Commerce ETF and Invesco Alerian Galaxy Blockchain Users have access to the same vital segments as the Invesco Alerian Galaxy Crypto Economy ETF (SATO) but add exposure to companies that use blockchain technology.  Along with ETFs, the company also offers several different financial products to meet clients' requirements. Invesco offers a broad range of mutual funds which can be actively managed or passively managed.   They can also provide exposure to domestic and international markets. Fixed-income mutual funds are also on offer, which can customize the client's portfolio.   The company offers four different asset class type mutual funds Alternatives  Balanced  Equity and   Fixed income.   The corporation also allows access to the Muni market, i.e., the bonds issued by municipal bodies through the static income strategy.   Some mutual funds are Invesco DB Agriculture Fund, Invesco DB Base Metals Fund, Invesco DB Energy Fund, etc. FAQs What are the Invesco PowerShares? Invesco PowerShares (previously PowerShares Capital Management) is a Chicago-based investment management firm that oversees exchange-traded funds (ETFs).   Since 2006, the company has been a subsidiary of Invesco, which markets the PowerShares product. PowerShares funds were founded in 2002 and use quantitative indices as a benchmark. What do PowerShares ETFs invest in? PowerShares ETFs invest in commodities, diverse stocks, and small and microcap firms. Is Invesco the same as PowerShares? PowerShares is now called Invesco ETFs, after Invesco's merger. What is Powershare ETF popular for? Invesco PowerShares is a Chicago-based investment management firm that oversees exchange-traded funds (ETFs). PowerShares funds were founded in 2002. It is a fairly valued index and one of the most famous international stocks. Consult an expert advisor to get the right plan TALK TO AN EXPERT
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What are Marijuana ETFs? All you need to know about

What are Marijuana ETFs? All you need to know about

Ever heard of Marijuana ETFs? Marijuana has many nicknames, including weed, M.J., herb, cannabis, and other slang phrases. It's Cannabis Sativa's dried green or grey blooms.   The substance's major psychoactive component is tetrahydrocannabinol (THC), which causes people to experience a mind-altering condition when eaten. Cannabidiol (CBD), the second most crucial ingredient in marijuana, has helped treat pain, anxiety, and other ailments.  Marijuana ETFs are a relatively new and rapidly-growing segment of the ETF market. Marijuana ETFs rarely invest in local pharmacies or small-scale farmers. Cannabis ETFs, on the other hand, are more likely to invest in Pharma and Biotech companies that are conducting advanced research into clinical uses for cannabinoids.   They also like to augment their cannabis portfolio with firms that support the nascent marijuana market, such as fertilizers and alcohol and cigarette corporations that have invested heavily in potential marijuana revenue streams.  For instance, the ETFMG Alternative Harvest ETF (arguably the biggest marijuana ETF in terms of AUM) invests in a wide range of marijuana-related companies, including:  G.W. Pharmaceuticals is a pharmaceutical company based in London (cannabinoid-focused medicine).  Cronos Group is a multinational conglomerate based in (production and distribution).  Canopy Growth Corporation is a publicly-traded company based in Vancouver, British Columbia (research and product development).  Aurora Cannabis is a cannabis company based in Canada (product development and production).  Even though marijuana remains illegal under federal law, more than half of the states have approved medicinal marijuana, and eight states have legalized recreational marijuana, including California.   Most marijuana ETF issuers, on the other hand, go to great lengths to ensure that their funds only invest in companies that are either federally authorized or based in other locations, such as Canada.   Still, if the US Justice Department follows through on promises to pursue marijuana businesses that are legal in their home states, pot ETFs may face enormous legal risk. The perils of Marijuana ETFs Investing in cannabis, including cannabis ETFs, is fraught with danger. Regulatory uncertainties, funding challenges, and the sheer unpredictability of marketing strategies and operations could all change the future landscape, and thus the valuation of marijuana stocks and ETFs, dramatically and quickly.  1. Regulation  While recreational marijuana use and storage are now legal in some states (and medicinal cannabis use is legal even more), marijuana remains a Schedule 1 drug from the federal government's perspective.   This classification, which places marijuana alongside heroin, ecstasy, and LSD, implies that it has little medical use and is often used in the wrong ways.  This classification may result in legal ambiguity across state and federal regulations.  2. Unpredictability  Since its establishment in 2015, the U.S. Marijuana Index, which measures its largest cannabis companies, has seen both highs and lows. The index's 52-week high is 105.19, and its 52-week low is 19.91 as of July 7.  Marijuana ETFs have a total AUM of $1.94 billion, with 9 ETFs trading on U.S. exchanges. The expense ratio equals 0.71 percent on average. Equity is the underlying asset of marijuana ETFs.   The Advisor Shares Pure U.S. Cannabis ETF MSOS is the largest marijuana ETF, with $943.83 million in assets. PSDN, the finest performing Marijuana ETF in the previous year, was the Advisor Shares Poseidon Dynamic Cannabis ETF PSDN was the most recent ETF to launch in the marijuana market on 11/16/21.  Marijuana ETFs ranked based on their AUM from highest to lowest  TickerFund NameIssuerAUMExpense Ratio3-Mo TRSegmentMSOSAdvisorShares Pure US Cannabis ETFAdvisorShares$943.83M0.73%-22.75%Equity: U.S. CannabisMJETFMG Alternative Harvest ETFETFMG$632.63M0.75%-18.09%Equity: Global CannabisYOLOAdvisorShares Pure Cannabis ETFAdvisorShares$134.25M0.76%-26.87%Equity: Global CannabisPOTXGlobal X Cannabis ETFMirae Asset Global Investments Co., Ltd.$76.85M0.51%-27.38%Equity: Developed Markets CannabisCNBSAmplify Seymour Cannabis ETFAmplify Investments$65.73M0.75%-23.30%Equity: Global CannabisTHCXThe Cannabis ETFOBP Capital LLC$55.13M0.75%-26.96%Equity: North America CannabisTOKECambria Cannabis ETFCambria$21.82M0.42%-8.73%Equity: Global CannabisPSDNAdvisorShares Poseidon Dynamic Cannabis ETFAdvisorShares$8.24M0.92%-27.61%Leveraged Equity: Global CannabisBUDXCannabis Growth ETFBanhazl$3.22M0.79%-27.10%Equity: Global Cannabis Alternative index funds and ETFs are better suited for beginning investors or those seeking predictability. FAQs Are marijuana ETFs a good investment? Investing in Marijuana ETFs is new and has its set of risks. Investing in cannabis, including cannabis ETFs, is fraught with danger. Regulatory uncertainties, funding challenges, and the sheer unpredictability of marketing strategies and operations could affect one's returns dramatically. Is there a marijuana stock ETF? Some high performing marijuana stock ETFs are - ETFMG Alternative Harvest ETF, AdvisorShares Pure US Cannabis ETF, and ETFMG U.S. Alternative Harvest ETF What is a good marijuana ETF? Cambria Cannabis ETF (TOKE)AdvisorShares Pure US Cannabis ETF (MSOS)AdvisorShares Pure Cannabis ETF (YOLO)ETFMG Alternative Harvest ETF (MJ)Amplify Seymour Cannabis ETF (CNBS)The Cannabis ETF (THCX)Global X Cannabis ETF (POTX) If you can digest the unpredictability of an unpredictable market in return for receiving it at a very early stage and your investment is well-diversified and healthy, cannabis ETFs could be a good fit for you. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
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What are State Street Global Advisors? All you need to know about

What are State Street Global Advisors? All you need to know about

The asset management branch of State Street Corporation, State Street Global Advisors, was created in 1978 in Boston, Massachusetts.  Company's first three products  The domestic index fund An international index fund (based on the MSCI EAFE index) Short-term investment fund  By 1989, the division's assets were $53 billion (USD). State Street Global Advisors was established in 1990 as a distinct company from State Street Bank to expand internationally.   With the S&P 500 SPDR product release, traded on the American Stock Exchange in 1993, SSGA established the investment vehicle known as the exchange-traded fund (ETF).  State Street Global Advisors (SSGA) is State Street Corporation's investment management subsidiary and the 4th largest asset manager, with roughly $4.14 trillion in assets under administration as of December 31, 2021.   After BlackRock and Vanguard, SSGA is the world's third-largest ETF manager. States, corporations, foundations, non-profit foundations, business financial officers and CFOs, investment firms, financial advisors, and other intermediaries worldwide use the company to create and manage investment plans.  The company has won several accolades for its services. Some of the prominent awards are  Asia Asset Management's 2022: Best of the Best Awards- At Asia Asset Management's 2022 Best of the Best Awards, State Street was named Best Global Custodian in Asia-Pacific (25 years) and Best Middle and Back Office Provider.  HFM Asia Services Awards 2021: State Street was named Best Hedge Fund Custodian for the second year in a row at the HFM Asia Services Awards 2021.  The Asset Triple A Sustainable Investing Awards for Institutional Investor, ETF and Asset Servicing Providers 2021- For the seventh year in a row, State Street was named Best in Securities Lending at The Asset Triple A Asset Servicing Providers Awards.  Aite Group 2020 Impact Innovation Awards The organization earned operational efficiency after being recognized as a financial institution that has used technology to raise the bar.  Asia money FX Survey 2020 In South Korea, Taiwan, and Thailand, State Street has been named Market Leader. The company provides several ETFs and mutual funds to be chosen from. The company has a set of thematic ETFs which focus on cutting-edge innovation.   The SPDR S&P Kensho New Economy ETFs have the backing of S&P Kensho's forward-thinking and dynamic approach, which employs artificial intelligence to analyze regulatory filings to find and classify innovative enterprises based on factors other than revenue and balance sheet data.  Some such ETFs are associated with Future security, clean power, smart mobility, space exploration, intelligent infrastructure, etc.   Fixed Income ETFs come at a high degree of diversification with a 60% lower expense ratio than competitors. Investment worth $621 billion has been made by the firm in fixed-income assets with over 100 strategies.  SPDR Blackstone Senior Loan ETF, and SPDR Portfolio TIPS ETF are some of the fixed-income ETFs. There are more than 250 low costs passively managed ETFs offered by the company all over the globe.  Investors can use SPDR Portfolio ETFs to build large, diversified portfolios by choosing from equities and fixed-income exposures. SPDR Portfolio S&P 400™ Mid Cap ETF, SPDR Portfolio S&P 500® Growth ETF, etc., are some core ETFs.  Gold-backed exchange-traded funds (ETFs) combine the gold market's flexibility, openness, and accessibility with the cost-effective liquidity of an ETF wrapper through the company's offerings. The company offers two distinct products 1. SPDR Gold Shares 2. SPDR Gold Mini Shares The company also provides a variety of ESG investing options along with sectoral investing options and Smart Beta ETFs.  Along with ETFs, the firm also offers a variety of mutual funds to choose from - grouped into four categories SSGA Funds, State Street Institutional Funds, State Street Institutional Investment Trust, and State Street Variable Insurance Series Funds. These funds track indices like FTSE Russell, MSCI, Multiple/Blend, S&P Dow Jones, etc.  Multiple ESG investment strategies 1. Screening Negative screening excludes specific firms, sectors, or nations based on environmental, social, and governance (ESG) issues and an investor's values-based goals. Among the advantages are reduced reputational risk and the ability for investors to avoid providing capital to organizations or sectors that contradict their views.  2. Best in class This strategy focuses on investing in sectors and firms that outperform the industry peers in terms of ESG performance.  3. ESG integration To limit risk and uncover possibilities for long-term outperformance, active portfolio managers routinely include ESG signals and factors in the investment analysis and decision-making process.  4. Climate investing This thematic investment strategy aligns portfolios with the transition to a low-carbon economy and limits global warming to far below 2 degrees Celsius.  5. ESG for index investing ESG investors can benefit from index investing in various ways, including diversification and transparency. Index methods give investors a simple way to acquire broad diversification in their portfolios, which improves risk management.  Thus, the pioneer of ETFs should be taken into account whilst creating a portfolio! FAQs What are State Street Global Advisors known for? State Street Global Advisors is an investment management firm located in the USA. It offers the following services such as portfolio management and advisory services to individuals, institutions, trusts, private funds, charitable organizations, and investment companies Where is the Headquarters for the State Street Global Advisors? The headquarters for State Street Global Advisors is in Boston, Massachusetts, United States. Who are State Street's clients? State Street's clients are Consumer Healthcare Products Association (CHPA) CIGNA. Everytown for Gun Safety Action Fund. Health Partners Plans. Lilly USA Is SSGA an established investment firm? State Street Global Advisors (SSGA) is State Street Corporation's investment management subsidiary and the 4th largest asset manager, with roughly $4.14 trillion in assets under administration as of December 31, 2021.   Consult our expert advisor to discuss the right plan for you  TALK TO AN EXPERT
Top 3 ETFs in the large-cap category

Top 3 ETFs in the large-cap category

This article will look into the three best large-cap categories of ETFs. But before that, let's understand what large-cap is. What is a large cap?  Even if they're young, large-cap corporations are likely to be well-established and dominating in their respective industries. Some corporations go public and have a market cap of more than $10 billion right away.   A corporation having a market capitalization of more than $10 billion is known to be a large-cap (or "big cap"). According to the Wilshire 5000 Overall Market Index, large-cap companies account for roughly 93 percent of the total U.S. equity market.  Large-cap corporations are usually well-known, having a track record of generating high-quality goods and services. Many of these businesses have grown their businesses beyond the United States and may have a diverse business that spans multiple industries.   As these businesses seek to expand, they will look for possibilities to buy smaller businesses or even consolidate with competitors of similar size. Large-cap companies are less volatile and less susceptible to significant price movements. As a result, large-cap stocks are a safer investment option.  Key indices to track the large-cap market  1. Dow Jones Industrial Average Apart from transportation and utilities, the DJIA exclusively analyses the performance of 30 businesses considered "blue chips," or those that are dominating champions in their respective industries. The DJIA is not indicative of the large-cap market as the S&P 500 Index. a 2. S&P 500 Even though it focuses primarily on the large-cap sector, the S&P 500 is the benchmark for the U.S. stock market.   This index measures the performance of the 500 most significant and most profitable corporations in the United States across 11 distinct industries. Top 3 ETFs in the large-cap category  Rank ETF1 Schwab International Equity ETF 2 BlackRock U.S. Carbon Transition Readiness ETF 3 Schwab Emerging Markets Equity ETF  Schwab International Equity ETF   SCHF delivers a market-like basket of worldwide stocks. The fund's portfolio closely resembles our benchmark in performance statistics and sector coverage.   SCHF removes most of the small caps in our standard, although this hasn't substantially influenced performance. The fund is also unique because it includes South Korea. Korean shares wind up in the basket because the fund's index classifies South Korea as an advanced nation.  Unlike many of its competitors, it also carries Canadian stocks. The MSCI ESG Fund Rating for the Schwab International Equity ETF is AAA, based on 8.93 out of 10.   The MSCI ESG Fund Rating assesses a portfolio's long-term resistance to risks and opportunities posed by environmental, social, and governance variables. Performance  Performance [as of 14/03/22]1 year3 years5 years10 yearsSCHF-5.52%6.52%6.33%5.65%MSCI World ex USA IMI Index-3.89%6.67%6.37%5.86% SCHF Top 10 Countries’ exposure Source: etf.com SCHF Top 10 Holdings  Source: etf.com SCHF Details BrandSchwabExpense Ratio0.06%YTD Return-10.91%AUM$27.25BNumber of Holdings1491Avg. Spread ($)$0.01Average Daily $ Volume$309.56M BlackRock U.S. Carbon Transition Readiness ETF  Firstly, LCTU strives to outperform its index, the Russell 1000 Index, a broad equity index comprising the 1,000 largest U.S. corporations. The fund employs proprietary scoring criteria to evaluate companies' readiness for a low-carbon economic transition in comparison to their industry peers when selecting shares from the Russell 1000.   Five categories make up the 'transition ready' score: fossil fuels, clean technology, energy management, waste management, and water management.   LCTU favors high-scoring companies while minimizing risk. Firms may also be evaluated on their governance in addition to their strategy. The fund adviser may invest in Russell 1000 securities that aren't necessarily green economy investments despite the low-carbon orientation.   The MSCI ESG Fund Rating for BlackRock U.S. Carbon Transition Readiness ETF is A.A., based on 8.02 out of 10. The MSCI ESG Fund Rating assesses a portfolio's long-term resistance to risks and opportunities posed by environmental, social, and governance variables.  Performance Performance [as of 14/03/22]1 month3 monthsYTDLCTU-5.37%-10.67%-13.31%No underlying index. The fund performed poorly not because of its inherent structure but due to the volatile markets and emerging uncertain geopolitical situations as of March 2022.  The fund invests entirely in the USA.  LCTU Top 10 holdings  Source: etf.com LCTU details BrandBlackrockExpense Ratio0.14%YTD Return-13.31%AUM$1.34BNumber of Holdings329Avg. Spread ($)$0.05Average Daily $ Volume$215.49K Schwab Emerging Markets Equity ETF   According to FTSE, SCHE follows the FTSE Emerging Index, which comprises large and midcap companies from emerging market countries. Market capitalization is used to choose and weigh stocks.   South Korea is not a part of the index as an emerging market, notable from other comparable indices. Instead, countries like India and China have gained more clout. Every March and September, component are assessed on a semi-annual basis.   The MSCI ESG Fund Rating for the Schwab Emerging Markets Equity ETF is BBB, based on 5.56 out of 10. The MSCI ESG Fund Rating evaluates a portfolio's long-term resistance to risks and opportunities posed by environmental, social, and governance variables.   The best ESG Fund Rating is AAA, while the poorest ESG Fund Rating is the worst (CCC).  Performance Performance [as of 14/03/22]1 year3 years5 years10 yearsSCHE-18.35%2.69%4.52%2.33%MSCI Emerging Markets Investable Market Index-17.99%3.31%4.98%2.53% SCHE Top 10 countries Source: etf.com SCHE Top 10 holdings Source: etf.com  SCHE Details BrandSchwabExpense Ratio0.11%YTD Return-13.54%AUM$8.51BNumber of Holdings1708Avg. Spread ($)$0.01Average Daily $ Volume$75.29M FAQs What is the large-cap category?  A large-cap company refers to a corporation having a market capitalization of more than $10 billion. What is an example of a large-cap stock? Some examples of large-cap stocks are Microsoft, TATA, Apple, Amazon, Alphabet, Reliance, and Facebook. What are the top 3 ETF large-cap funds? Schwab International Equity ETFBlackRock U.S. Carbon Transition Readiness ETFSchwab Emerging Markets Equity ETF Is S&P 500 all large-cap? S&P 500 is a market index that contains large-cap stocks. One should look out at these ETFs before investing in the large-cap category in the USA. Consult an expert advisor to find the right plan for you TALK TO AN EXPERT
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What are leveraged ETFs? All you need to know

What are leveraged ETFs? All you need to know

You have seen several different types of ETFs. There are some specialized ETFs that use complex strategies to deliver a return. Leveraged ETFs are one such type of specialized ETF.  What do leveraged ETFs mean? In laymen's terms, it means exerting force. In ETF parlance, it means generating a multiple of returns given some return of the underlying index.   For instance, ProShares Ultra S&P 500 ETF is a leveraged ETF that returns twice the daily return of the S&P 500. If the S&P is up 2% daily, the ETF will be up 4% after adjusting the expense ratio. Conversely, if the S&P is down 1.5%, the ETF will be down 3%.  These leveraged ETFs rebalance their portfolio allocations daily. Thus, each day is considered a new day without any connection to the previous day.   Most investors confuse this leverage with more time-bound influence, as in if the S&P is up 10% in a year, the ETF will be up 20% if it's a 2x return ETF, which is entirely wrong! These ETFs work on a daily leverage basis, and in the longer run, the fund will not exactly replicate the underlying index. The rebalancing of funds is done on a daily basis to generate an assured return. Continuing with our previous example, if the ProShares ETF is giving a 2x return, the ETF will have to acquire assets that are twice the value of the NAV of the fund.   As an illustration, if a fund has 100 units of securities, the fund will swap these with the counterparty for exposure to 200 units of the performing assets. This rebalancing is usually in the direction of the market.  Such leveraged ETFs can be shortly leveraged or long leveraged Long-leveraged ETFs will trace the market trend in the same direction. Short-leveraged ETFs will move on the contrary.   For example, the ProShares UltraShort S&P 500 ETF design is such that if the S&P rises 5% in a day, the ETF goes down 10%, i.e., a 2x return in opposite direction. Similarly, if the index value falls 5%, the ETF will be up 10%.  Since the rebalancing is on a daily basis, compounded growth, in the long run, doesn't resemble the development of the underlying index. Volatility in the market can severely dent the prospective gains of the ETFs, leading to severe underperformance compared to the underlying assets. For instance, if a triple-leveraged ETF loses 30%, the underlying index must have lost only 10%.   A leveraged ETF can lose its value in some tremendously sporadic cases, mainly when derivatives are part of the ETFs kitty.  Let's take some easy examples and understand how things pan out.  1. Let's take a scenario where the market is up 5% daily, and a 2x long leveraged ETF is traded. Days Daily market performance Expected index level Expected 2x leveraged long ETF level Daily ETF performance 0 0% 100 100   1 5% 105.00 110.00 10% 2 5% 110.25 121.00 10% 3 5% 115.76 133.10 10% 4 5% 121.55 146.41 10% 5 5% 127.63 161.05 10% 6 5% 134.01 177.16 10% 7 5% 140.71 194.87 10% 8 5% 147.75 214.36 10% 9 5% 155.13 235.79 10% 10 5% 162.89 259.37 10% 10-day cumulative change   62.89 159.37   2. Let's take a scenario where the market is down 5% daily, and a 2x long leveraged ETF is traded: Days Daily market performance Expected index level Expected 2x leveraged long ETF level Daily ETF performance 0 0% 100 100   1 -5% 95.00 90.00 -10% 2 -5% 90.25 81.00 -10% 3 -5% 85.74 72.90 -10% 4 -5% 81.45 65.61 -10% 5 -5% 77.38 59.05 -10% 6 -5% 73.51 53.14 -10% 7 -5% 69.83 47.83 -10% 8 -5% 66.34 43.05 -10% 9 -5% 63.02 38.74 -10% 10 -5% 59.87 34.87 -10% 10-day cumulative change   -40.13 -65.13   3. Let's take a scenario where the market is down 5% and up 5%, and a 2x long leveraged ETF is traded. Days Daily market performance Expected index level Expected 2x leveraged long ETF level Daily ETF performance 0 0% 100 100   1 5% 105.00 110.00 10% 2 -5% 99.75 99.00 -10% 3 5% 104.74 108.90 10% 4 -5% 99.50 98.01 -10% 5 5% 104.48 107.81 10% 6 -5% 99.25 97.03 -10% 7 5% 104.21 106.73 10% 8 -5% 99.00 96.06 -10% 9 5% 103.95 105.67 10% 10 -5% 98.76 95.10 -10% 10-day cumulative change   -1.24 -4.90   These are the types of results you can expect if you hold a leveraged ETF. So, an investor must not get deceived by the vocabulary of the ETF, i.e., 2x isn't the 2x that you think. Traders for making quick short-term gains have used leveraged ETFs.  Suppose an investor predicts that the price of natural gas will increase in the coming days or weeks, then investing in a leveraged ETF to enhance the return is sensible if the prediction is correct. However, if it's the other way around, he can buy some inverse leveraged ETFs to maximize his gains and thus act as a hedge to prevent potential losses.  If the prediction is wrong, the losses are magnified by such ETFs.  How do Leveraged ETFs Work?  Let’s say an investor buys shares of a 3 times-leveraged ETF for $200. If the underlying index rises 20% in a single session, the investor gains 60%, boosting the investment to $320.  Leveraged ETF resets every day for the next session. If the underlying index drops 10% the following day, the position's value declines 30% to $272.  As and when the stocks and market indexes fall or rise over time, longer-term positions in leveraged ETFs can become very challenging to hold, thanks to amplified gains and losses.  Who should invest in Leveraged ETFs? Leveraged ETFs are best for seasoned investors with a comprehensive understanding of the risks involved and how it works.  Leveraged ETFs offer an opportunity to add significant value to a trader's overall investment strategy who has an appetite for risk, significant experience, and wish to amplify daily returns in both uptrend and downtrend.  When volatility in the market increases, leveraged ETFs can be effectively used for hedging purposes. Leveraged ETFs can open up many new opportunities if the objective is to hedge your trades and enhanced returns.  Remember to research leveraged funds with caution, as losses can be magnified similarly to returns.  Proceeding with caution and doing due diligence before acting is the way to go. FAQs What is a leveraged ETF? Leveraged ETFs generate a multiple of returns given some return of the underlying index.   Who Should Invest in Leveraged ETFs? Leveraged ETFs are best for seasoned investors with a comprehensive understanding of the risks involved and how it works.  How Do Leveraged ETFs Work?  Leveraged ETFs offer an opportunity to add significant value to a trader's overall investment strategy who has an appetite for risk, significant experience, and wish to amplify daily returns in both uptrend and downtrend.  Consult our expert advisor to get the right plan for you TALK TO AN EXPERT
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What are Bitcoin ETFs? All you need to know about

What are Bitcoin ETFs? All you need to know about

Thinking of buying Bitcoins? Maybe Bitcoin ETFs? But what is a bitcoin and what are bitcoin ETFs? How can you invest in bitcoins, what is the procedure and benefits? Let'sfind out! Bitcoin is a cryptocurrency founded by an unidentified person Satoshi Nakamoto, in 2009. This cryptocurrency makes blockchain principles its base, which enables a distributed network to maintain an immutable, decentralized ledger of transactions with no single-point failure.   Bitcoins are created through the "mining" process, using specialized computers to solve increasingly complicated arithmetic puzzles. Because this process is decentralized, buyers have appreciated the deflationary attraction of a limited and finite quantity of only 21 million bitcoins.   This cryptocurrency has enabled anonymous transactions, more efficient cross-border capital transfers, and the creation of a new digital store of value.  Since its inception, Bitcoin has been a disruptor, challenging the business practices of both traditional financial sector organizations and central banks. The Bitcoin economy is still in its early stages, with significant growth potential and associated hazards.   While trading in Bitcoin may offer huge profits in the short term, there is still a lot of ambiguity among authorities and various obstacles in safely keeping the asset across platforms.   Due to these risks, no ETFs that provide especially significant exposure to Bitcoin are currently available; however, numerous funds are in the plans. Investors can also have tangential access to Bitcoin by investing in Blockchain technology companies.  Trading in Cryptocurrencies such as bitcoin necessitates a little more effort than investing in equities, bonds, and other traditional assets. To trade in cryptocurrencies, you have to open a trading account with a crypto trading exchange. There's also the issue of storing cryptocurrency, which necessitates the usage of a crypto wallet.  Buying a Bitcoin ETF or fund that operates on a stock exchange as a workaround for these concerns allows you to keep your Bitcoin investment in the same account as your other stocks, bonds, and traditional financial products.  What are Bitcoin exchange-traded funds (ETFs)?  Bitcoin ETFs are stock exchange-traded funds that seek to track Bitcoin's performance. When you purchase an ETF, you are not buying the fundamental investment.   Instead, you're purchasing stocks in a fund that invests in or tries to replicate the performance of a particular security or index in this case, Bitcoin.  Bitcoin ETFs would merge the most significant aspects of the two most popular investments: the simplicity of engaging in an ETF and access to bitcoin, the popular cryptocurrency.  The ETFs will function similarly to other ETFs. On the other hand, Bitcoin ETFs will monitor the price of Bitcoin rather than a market index like the S&P 500 or the DJIA.  Who should buy Bitcoin exchange-traded funds (ETFs)?  A Bitcoin ETF could be an excellent alternative for those searching for a more conventional approach to investing in Bitcoin. Investing in Bitcoin directly can be challenging, as it requires determining how the asset will be kept and which exchange to use to make the transaction. Crypto futures contracts are packaged into ETFs, which removes some complexity.  The ETF structure may make it easier for certain institutional investors to enter the cryptocurrency market, which may help maintain the Bitcoin demand. Where can you get Bitcoin ETFs?  Most online brokers who sell traditional assets such as equities and bonds will be able to offer Bitcoin ETFs. Traditional exchanges trade ETFs, such as the New York Stock Exchange and the Nasdaq.  Are Bitcoin ETFs subject to regulation?  The establishment of any Bitcoin-related ETFs has proven to be problematic. The ProShares Bitcoin Strategy ETF was the first ETF linked to Bitcoin when it was introduced last October; rather than investing in Bitcoin directly, the fund employs futures contracts.   Due to various factors, the Securities and Exchange Commission is still yet to authorize ETFs that invest directly in Bitcoin.  While there are currently no ETFs that acquire Bitcoin directly, there are alternatives. Here are five things to think about  ETFAUMDescriptionGrayscale Bitcoin Trust (OTC: GBTC)$27.2 billionThis is an investment trust, not an ETF, but it's the first and largest fund tracking Bitcoin's performance.ProShares Bitcoin Strategy ETF (NYSEMKT: BITO)$1.41 billionA recent ETF launch attempts to track Bitcoin using Bitcoin futures contracts.Bitwise 10 Crypto Index Fund (OTC: BITW)$894 millionThis fund is 60% Bitcoin, with the balance invested in other cryptos.Bitwise Crypto Industry Innovators ETF (NYSEMKT: BITQ)$117 millionThis ETF invests in Bitcoin and crypto stocks.Valkyrie Bitcoin Strategy ETF (NASDAQ: BTF)$51 millionThis is a new ETF that invests in Bitcoin futures from a crypto investment firm. FAQs Is there any Bitcoin ETFs? Bitcoin is indeed a recent addition to the exchange-traded fund market (ETFs). Investors can access the alluring possibilities of bitcoin through bitcoin exchange-traded funds (ETFs) without having to store it securely. Presently, Bitcoin ETFs could only hold equities of firms or other ETFs that have exposure to cryptocurrencies, along with Bitcoin futures contracts. Can one purchase Bitcoin ETF? Your choices are very constrained if you wish to purchase a Bitcoin ETF. The ProShares Bitcoin Strategy ETF ($BITO) is the only Bitcoin ETF that is accessible in the United States. You will require a foreign securities account because the Bitcoin ETF BTCE is listed outside of the Frankfurt Stock Exchange. What is an ETF for Bitcoin? An exchange-traded fund (ETF) for bitcoins maintains tabs on the currency market. Rather than using crypto exchange platforms, ETFs can be purchased, bought, and exchanged on standard stock market markets. Aside from the inherent volatility of Bitcoin investments, Bitcoin ETFs and funds aren't a great substitute if you want access to the world's largest digital currency.   However, choosing an ETF has advantages because it is useful as a workaround for tracking Bitcoin's performance. Consult our expert advisor to find the right plan for you TALK TO AN EXPERT
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What is Vanguard?

What is Vanguard?

Vanguard is an American registered investment advisor based out of Pennsylvania. It was established in the year 1975 by John Bogle. As stated by the company, the core purpose is, 'To take a stand for all investors, treat them fairly, and give them the best chance for investment success.'   This investment company offers a varied range of investment products to a varied clientele. Since then, the company has shown unbelievable growth in the assets under management (AUM). From 1975 to 2021, the AUM has increased from 1.7 billion USD to 7300 billion USD. It is the world's largest mutual fund provider and second-largest ETF provider, just second to BlackRock's iShares. It is to the credit of Vanguard that index investing and indirectly cheaper investing came to focus and rescue smaller retail investors.   Vanguard, unlike other investment companies, offers unique governance and ownership structure.   The company is indirectly owned by fundholders, generating a feeling of oneness between the investors and the company.    The company bagged several accolades. To name a few  September 2021, Morningstar rated eight Vanguard ETFs as 5-star ETFs with risk-adjusted returns in the top 10% of their peer groups and 36 as 4-star ETFs with risk-adjusted returns in the top third.  May 2021, Vanguard found itself on the list of top Roth IRA providers, according to Money magazine.  March 2021, Thirteen Vanguard funds received Refinitiv Lipper Fund Awards. The awards honor mutual funds and firms with the best risk-adjusted performance over three-, five-, and 10-year horizons.  September 2020, Ten Vanguard funds were there in Morningstar's Thrilling 36 list.  According to the company, its investment strategy can is as follows:  1. Investment Merit Avoid short-term fads and speculative investments. Instead, concentrate on asset classes that generate positive actual returns from dividends, interest, and other recurring cash flows.  2. Client needs The company bases its products on the client's needs for the short term and the long term.  3. Competitive advantage The company aims at outperforming its peers through credible investment strategies.  4. Feasibility All products come outpost a feasibility study based on regulatory needs, risk constraints, etc.  5. Vanguard offers various services like Mutual funds ETFs Brokerage services Asset Management services Advisory services Retirement services Vanguard currently provides around 417 funds across the globe, out of which 210 are available in the United States and 207 are outside the U.S. market.  The company offers advisory services tailored to meet the client's needs. Vanguard offers personal advisory services to clients to better settle their obligations and increase wealth - mainly aimed toward HNIs (High Net Worth Individuals). Moreover, Vanguard offers automated advisory services powered by proven investment methodologies for providing investment advice. State-of-the-art Robo-advisors run it. Employees who invest through employer-sponsored retirement plans may benefit from Vanguard Participant Advice Services. Vanguard also offers institutional advisory services.    Vanguard offers two asset classes: Namely investor shares Admiral shares. Admiral shares are the asset classes with lower expense ratios but higher minimum investment requirements between $ 3000 to $ 10000 per fund. Investor shares have higher expense ratios and minimum investment requirements.    Vanguard also provides quality investment options in active and passively managed funds. Vanguard actively managed funds have an AUM of 1.7$ Trillion, and 87% of their funds have outperformed peer funds. They also offer a meagre average expense ratio of 0.18%. Some of the actively managed Vanguard funds are Fund NameTickerAsset ClassAverage annual return (5 years)Expense RatioU.S. Growth Fund Admiral Shares  VWUAXDomestic Stock - General21.61%0.28%Emerging Markets Select Stock Fund  VMMSXInternational8.74%0.85%Diversified Equity Fund  VDEQXStock - Large-Cap Blend  16.91%0.35%Long-Term Treasury Fund Admiral Shares  VUSUXMoney Market  5.67%0.10% Vanguard pioneered the index investment funds   69% of their index investment funds outperformed their peer funds over the last ten years.   The AUM under index funds is around 6.3 $ trillion.   On average, the expense ratio of an index fund is approximately 0.07%.  Some examples of index funds are  Fund NameTickerAsset ClassAverage annual return (5 years)Expense Ratio500 Index Fund Admiral SharesVFIAXStock - Large-Cap Blend16.74%0.04Balanced Index Fund Admiral Shares  VBIAXBalanced  11.06%0.07%Vanguard Consumer Discretionary Index Fund Admiral Shares  VCDAXStock - Sector  19.17%0.10%Vanguard Developed Markets Index Fund Admiral Shares  VTMGX  International  8.48%0.07% Several of their mutual fund choices are available in ETFs, traded freely on the U.S. stock exchange.  The bottom line is that Vanguard has been an industry leader and has showcased top-notch corporate governance standards, which has pitched the IRA as a very trusted partner in investing.  FAQs What is Vanguard and how does it work? Vanguard is an American registered investment advisor based out of Pennsylvania. It was established in the year 1975 by John Bogle. What is the purpose of Vanguard? Vanguard is an investment company that offers a varied range of investment products to a varied clientele. Since then, the company has shown unbelievable growth in the assets under management (AUM). From 1975 to 2021, the AUM has increased from 1.7 billion USD to 7300 billion USD. How many funds does Vanguard have? Vanguard currently provides around 417 funds across the globe, out of which 210 are available in the United States and 207 are outside the U.S. market. 
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Difference between ETF and Stocks

Difference between ETF and Stocks

You already saw the difference between Exchange Traded Funds and Mutual funds. Now, let us focus on the difference between ETF and stocks. Investors have many choices to invest in to grow their wealth in today's day and age. The list is virtually unending when investing in stocks, bonds, mutual funds, ETFs, etc.   Investors want to see investments grow; thus, each has many advantages and disadvantages.  Retail investors can choose from stocks and ETFs. Both are available for trading on the stock market. The stock offers ownership in a single firm; an ETF gives you a basket of securities depending upon the type of ETF. Thus, ETFs provide access to virtually any part of the financial market. ETFs are collections of stocks, bonds, commodity derivatives, and other investments traded on an exchange. Source: Freepik What is the similarity between ETFs and Stocks?   ETFs and stocks are taxable upon redemption. Both offer a steady income.  After applicable tax deductions, some stocks pay dividends to the investors' accounts. Similarly, the assets underlying the ETFs also generate dividends and returns, either invested back into the fund or given back to the investors after proper deductions. There are various sectors to choose stocks and ETFs from. Similar to stocks, ETFs can also be traded on the stock exchange. Difference between ETF and Stock? ETFs are a group of securities packaged as a unit and listed on the exchange. These assets need not be only stocks but can be any security.  Fund managers who own the underlying securities manage these ETFs. The concerned investors of the ETFs do not own the underlying assets directly and hence give no ownership and voting rights. Stocks listed on the exchange offer ownership and voting rights (if they are not preferencing shares) in a single company. Preference shares are the shares that give the investor a promised return at the cost of forgoing voting rights in the AGMs.  ETFs are managed by a professional, thus saving you the trouble of deciding which securities in the underlying assets of the ETF to sell or hold. In the case of stocks, investors need to be very vigilant in the market to know when to buy, sell, or hold.   In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment reduces significantly.   In stocks, the risk attached is higher as the stock price depends entirely upon the company's performance and other exogenous (outside the control of the person in question) factors of the world.  The liquidity of a stock is way higher than the liquidity of an Exchange Traded Fund. However, in rare cases, the latter can have higher liquidity than the former. FAQs Is an ETF better than a stock? Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment reduces significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world.    Are ETFs good for beginners? ETFs are generally suitable for beginners as they are inexpensive compared to a few other investment tools. ETFs have a diversified asset profile, reducing the risk associated with the investment significantly.    Which is safe, ETF or stocks? ETFs have a diversified profile of assets, and the risk associated with the investment reduces significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous (outside the control of the person in question) factors of the world. The liquidity of a stock is way higher than the liquidity of an Exchange Traded Fund. However, in rare cases, the latter can have higher liquidity than the former. Are ETFs considered stocks? ETFs are a group of securities packaged as a unit and listed on the exchange. These assets need not be only stocks but can be any security. Fund managers who own the underlying securities manage these ETFs. Conclusion that every investment decision should be backed by the study of the risks involved.  The investor should keep his risk profile in mind before proceeding.   Most importantly, the strategies and goals of the investor are vital when choosing securities. The right for one might not be the right choice for the other.   Keeping these fundamental similarities and differences in mind helps in better decision-making. Consult our expert advisor to get the right plan for you. TALK TO AN EXPERT
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What is the difference between ETF vs FOF?

What is the difference between ETF vs FOF?

In the previous article, we learned about the difference between debt funds vs hybrid funds. In this article, we will look into the difference between ETF vs FOF ETF (Exchange-traded funds) An ETF (Exchange-traded fund) is a collection or portfolio of stocks. It aims to track market indices and thus imitate at least the same returns.  They are the choice of those people who wish to trade in open-ended funds. Like stocks, ETFs are also listed and traded on the stock exchanges.   Since trading happens on the stock exchanges, the value of the ETFs depends upon the demand and supply the price fluctuates during trading hours and can be less or more than the NAV (Net Asset value).  ETFs are of various types, like Bond ETFs, Industry-specific ETFs, Commodity ETFs, Currency ETFs, etc. The taxability of ETFs is dependent upon the holding period LTCG (Long term capital gains tax) is applicable if the holding period exceeds one year. Gains up to Rs 1,00,000 are not taxed and for gains above Rs 1,00,000, LTCG is suitable at 10% without indexation benefits. For a holding period of fewer than 12 months, an STCG (Short term capital gains tax) of 15% is applicable.  For Gold ETFs, STCG is applicable if the ETF’s holding period is less than 36 months; and LTCG post that period. The applicable STCG is in accordance with your income-tax slab, and the LTCG is 20% with indexation benefits. Source: Pexels FOF (Fund of Fund)  A Fund of Fund (FOF) is a fund that invests in various mutual fund schemes from either the same or different fund houses. FOFs are personalizable to cater to the investment goals and appetite of the investors.   In other words, FOFs are open-ended mutual funds that contain different types of mutual funds. Unlike ETFs, FOFs are not tradeable on the stock exchanges. FOFs’ trading happens once per day; hence they are less liquid than ETFs; the price of FOFs is calculated at the end of the trading day.   The different types of FOFs are international FOFs, gold funds, and asset allocation funds. For Funds of Funds, STCG is applicable if the ETF’s holding period is less than 36 months; and LTCG is suitable for a holding period exceeding 36 months.   The applicable STCG is per your income-tax slab, and the LTCG is 20% with indexation benefits.  In cost terms, ETFs are cheaper than mutual funds as they are passively managed; thus, their expense ratio is usually less than 0.5%. On the other hand, FOFs are a bit costly in that they are actively managed funds, and thus the management costs are added to the usual fee. ParameterETFFOFStructureETF is a basket of instruments (stocks, bonds, etc.) that tracks an index. For example – An ETF may track the Nifty 50 Index.FOF is a collection of mutual funds. May or may not track an index.PriceETFs trade like stocks on the exchange and thus they have a price and not NAV.Do not trade on an exchange and are available at NAV (Net Asset Value) as applicable. The NAV can be computed either daily, weekly, or as may be decided by the AMC in the prospectus of the fund.LiquiditySince it is traded like a stock, it has high liquidity. Thus, trading volume is a key indicator here.Low liquidity than ETF.ExpenseThe cheapest form of investment as the expense ratio is very low (generally less than 0.5%)Costlier than ETFs and also actively managed mutual funds. TaxesThe taxation for different ETFs is different which are Gold ETFs, Equity ETFs, and others.FOFs are taxed as debt funds despite the asset class they hold i.e. equity or debt. Taxation For Equity Exchange Traded Funds – Tax implications are dependent on the number of years an investor holds the ETFs. If –Holding period <1 year - capital gains earned will be considered short-term capital gains (STCG) and tax will be 15% Holding period >1 year - capital gains earned will be considered long-term capital gains (LTCG) and tax will be 10% after a 1 lakh exemption. For Gold & Other Exchange Traded Funds - Tax implications are dependent on the number of years an investor holds the ETFs. If –Holding period <3 years - capital gains earned will be considered short-term capital gains (STCG). Gains will be added to the investor's income and will be taxed as per the slab. Holding period >3 years - capital gains earned will be considered long-term capital gains (LTCG) and tax will be 20% after indexation benefits. FOFs - Tax implications are dependent on the number of years an investor holds the ETFs. If - Holding period <3 years - capital gains earned will be considered short-term capital gains (STCG). Gains will be added to the investor's income and will be taxed as per the slab. Holding period >3 years - capital gains earned will be considered long-term capital gains (LTCG) and tax will be 20% after indexation benefits FAQs Is ETF and FOF are same? ETFs are a set of securities much like mutual funds. While FOF is a Fund of Fund (FOF) that invests in various mutual fund schemes from either the same or different fund houses. Is investing in FOF good? Investing in FoF can help you save tax. Investors pay no capital gains tax at the time of rebalancing by the fund manager. Is ETF tax-free? No, Tax implications on ETFs are dependent on the number of years an investor holds the ETFs. If –o Holding period <1 year - capital gains earned will be considered short-term capital gains (STCG) and tax will be 15% o Holding period >1 year - capital gains earned will be considered long-term capital gains (LTCG) and tax will be 10% after 1 lakh exemption. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT
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What are Artificial Intelligence ETFs? All you need to know

What are Artificial Intelligence ETFs? All you need to know

Artificial intelligence will prove to be one of the important investment trends in the coming years. But let's be clear: artificial intelligence is already here.  According to Grand View Research, a business consulting organization, the worldwide artificial intelligence market was worth $39.9 billion in 2019.  Over the last year, artificial intelligence equities like Amazon.com (AMZN), Tesla (TSLA), and Nvidia (NVDA) have been market darlings, outperforming the overall market several times. With ETFs in action, most Artificial Intelligence ETFs are seeing at least a doubling in market value since last year.  What is Artificial Intelligence ETFs (AI ETFs)?  Artificial Intelligence ETFs are exchange-traded funds that invest in equities of artificial intelligence firms, such as robotics, navigational systems, automated machines, 3D printing, natural language processing, social media, and vehicles.  AI ETFs may invest entirely in AI stocks or incorporate other technology-related stocks in their portfolios. Source: Pexels ETFs that invest in artificial intelligence must satisfy at least one of these three criteria 1. They are funds that invest in firms developing new products or services, making technological advancements in a scientific study relating to artificial intelligence, or both.  2. These are funds with at least 25% of their portfolio invested in companies that spend a lot of money on artificial intelligence research and development. Amazon, Tesla Motors, Apple, and Alphabet are examples of such businesses.  3. Funds that choose specific assets for selection in the fund using artificial intelligence approaches.  How to invest in Artificial Intelligence ETFs?  AI ETFs are, arguably, the finest method to invest in AI technology - because, like with other specialized sectors still in the early phases of the growth cycle, picking specific companies that will dominate the industry is intrinsically difficult and risky.  When you buy in an AI ETF, you'll often gain exposure to numerous stocks, lowering your total market risk by diversifying your holdings.  Artificial Intelligence ETFs have $8.56 billion in assets under management, with 35 ETFs trading on US exchanges. The cost-to-income ratio is 0.68 percent on average. With $1.96 billion in assets, the Global X Robotics & Artificial Intelligence ETF BOTZ is the largest Artificial Intelligence ETF. IECS, the best-performing Artificial Intelligence ETF in the previous year, returned 16.25 percent.   The Advisor Shares Let Bob AI-Powered Momentum ETF LETB was the most recent ETF to come into the market in the Artificial Intelligence area on 02/08/22.  Top AI ETFs with respect to % change and AUM  Top ETF Performers according to etf.com TickerFund NameTrailing 30-day price TR changeDUDEMerlyn.AI SectorSurfer Momentum ETF3.24%WIZMerlyn.AI Bull-Rider Bear-Fighter ETF3.18%BOBMerlyn.AI Best-of-Breed Core Momentum ETF1.68%SNUGMerlyn.AI Tactical Growth and Income ETF1.56%ARKQARK Autonomous Technology & Robotics ETF0.31% Top ETF Performers in terms of AUM according to etf.com TickerFund NameTrailing 30-day price AUM changeLETBAdvisorShares Let Bob AI-Powered Momentum ETF3,390.76%DUDEMerlyn.AI SectorSurfer Momentum ETF18.37%BOBMerlyn.AI Best-of-Breed Core Momentum ETF16.19%WIZMerlyn.AI Bull-Rider Bear-Fighter ETF15.31%NVQQRAFT AI-Enhanced U.S. Next Value ETF11.85% FAQs What is AI ETF? Artificial Intelligence ETFs are exchange-traded funds that invest in equities of artificial intelligence firms, such as robotics, navigational systems, automated machines, 3D printing, natural language processing, social media, and vehicles. What are the top 5 artificial intelligence stocks? The top 5 artificial intelligence stocks are: Meta Platforms Inc. ( META)Nvidia Corp. ( NVDA)Adobe Inc. ( ADBE)International Business Machines Corp. ( IBM)Intuitive Surgical Inc. ( ISRG) What is a good AI stock to invest? Meta Platforms Inc. ( META)Nvidia Corp. ( NVDA)Adobe Inc. ( ADBE)International Business Machines Corp. ( IBM)Intuitive Surgical Inc. ( ISRG) What are some good AI ETFs to invest? AdvisorShares Let Bob AI-Powered Momentum ETF Merlyn.AI SectorSurfer Momentum ETF Merlyn.AI Best-of-Breed Core Momentum ETF The bottom line of AI ETFs is that robots, automation, and artificial intelligence have the potential to grow in demand in the future.  As a result, AI equities and AI ETFs have substantial growth potential, while the market risk is often more significant than the more diversified investments.  Investors should exercise caution when adding minorly targeted sector funds to a portfolio, such as AI ETFs. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
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Explore the advantages of ETFs and strengthen your portfolio

Explore the advantages of ETFs and strengthen your portfolio

Before talking about the advantages of ETFs. Let's talk a bit about Mutual Funds. For several years, traditional Mutual Funds have provided investors with the ease of building a diversified portfolio without choosing single security at a time.  These funds have provided retail investors like you and me far-reaching diversification and these funds have provided retail (non-professional) investors with far-reaching diversification and specialized management at a relatively lower cost. Exchange-traded funds (ETFs) take these benefits to a whole new level. ETFs have several advantages associated with them. Let’s see how each of them pans out for our use. Advantages of ETFs ETFs on similar lines to Mutual Funds offer a wide range of diversification. The general tendency of investors is to get concentrated in any particular sector without having any requisite knowledge of that sector, which results in lesser realized gains than actual potential.   This psychological problem can be countered by investing in ETFs, managed professionally and diversified to minimize risk and maximize growth. Nowadays, ETFs are available in a variety of types and orientations covering all major asset classes and sectors.   Global ETFs, local market ETFs, Industry-specific ETFs, and market niches provide investors access to industries where it may be cumbersome to buy and sell individual stocks and bonds.  Diversification also leads to risk management as the concentration in a given sector without expertise is avoided. ETFs can be a great tool to hedge your portfolio against any untoward market runs.  ETFs typically are low-cost instruments compared to traditional mutual funds because of their very nature. While trading ETFs, fewer hands and minimal paperwork are required; naturally, the costs fall compared to selling mutual funds. Thus, the expense ratio for ETFs is lower than other such securities, hence leaving you with a more significant amount of total capital in return compared to others.   For instance, the Vanguard REIT Index Fund Investor Shares (VGSIX) has a redemption fee of 1% if held for less than one year compared to Vanguard REIT ETF (VNQ), which has the same portfolio and has no redemption fees.  ETFs are traded openly in the stock market and hence are liquid compared to mutual funds, which aren’t. Redeeming a mutual fund is a very tedious process and requires a lot of time, whereas ETF selling is easy at any point of the day.  Mutual fund settlement takes place only once a day after the market timings, and this delay can prove costly. Most ETFs are very transparent in their operations and disclose their holding almost daily, which helps the investor make sound decisions about holding the ETFs in their portfolio.   Active semi-transparent ETFs reveal their complete portfolio holdings monthly or quarterly with a lag. Moreover, ETFs are simple products that can be easily understood by a layman investor, unlike some complex financial products except some specialized ETFs like inverse and leveraged ETFs.   With the help of a single transaction, the investor can buy or sell a bunch of underlying securities without the hassle of purchasing each stake individually.  A commodity derivative market is a place where there is restricted access to a few people and institutional investors due to the high costs of owning them.   On the other hand, ETFs have enabled retail investors to be a part of this segment at low prices. Thus, your portfolio gets new exposures with the help of such ETFs.  ETFs also come with an added advantage of tax benefits compared to mutual funds. The tax benefits in the ETFs are due to the very working of the ETFs. The swap agreements between the fund and AP reduce the tax liability for the investors.   The capital gains tax on ETFs is due to selling the ETF, whereas, in a mutual fund, the tax liability is on the investor during the entire life of the holding.  There are several advantages to making ETFs a part of your investment portfolio. Besides rock-solid investments like equities, mutual funds, and derivatives, ETFs are a financial tool that should be part of your investing arsenal, which increases the firepower of your portfolio manifold! Disadvantages of ETFs Long-term venture capital firms may only have a time horizon of 10 to fifteen years, thus daily price fluctuations may not be beneficial to them. Some venture capitalists could trade often as a result of these hourly pricing delays. A transaction that costs at the end of each day might avoid irrational fears of damaging an investment goal that may be inspired by a substantial movement over a short period of time.  Diversity is less crucial because fewer shares make up the market index, which may cause investors to concentrate on big businesses in certain industries or foreign equities. Future growth prospects may be out of reach for ETF owners due to a lack of exposure to mid-and small-cap companies.  Expenses can be higher. Although many people compare trading ETFs to trading other types of funds, the costs are greater when comparing ETFs to buying a single stock. Although the actual commission paid to that broker may have been identical, the stock has no management fee. Additionally, specialty ETFs are considerably more likely to follow a lower traffic index as more of them are introduced. This might result in a significant bid/ask spread. If you invest in real stocks, you could receive a better offer.  Some ETFs provide lower interest yields. Some ETFs are ETFs that pay a dividend, but their yields might not be as high as those of owning a company or group of equities with a high yield. ETFs often come with reduced risks, but stocks can offer much higher dividend yields if a buyer is willing to assume the risk. Even if you can choose the company with the highest dividend yield, ETFs follow a wider range of securities, so the average return will be lower.  A leverage ETF is a type of fund that boosts the returns of an underlying index using debt and financial products. Some double- or triple-leveraged ETFs have the possibility of losing more than twice as much as the underlying index. These speculative investments kinds require careful consideration. The overall loss could increase quickly if the ETF is held for a long time.  FAQs Why ETF is not popular in India? Costs are affordable yet insufficient. Although ETFs have minimal prices worldwide, they are marginally greater in India. The charges increase even more when brokerage fees are included. Due to poor margins, not enough has been done to increase investor awareness of ETFs in India. Is ETF as a long-term plan good for India? ETFs are incredibly secure and a great choice for long-term investment. Experts believe that just because ETFs are balanced and combine the investments of several investors, they are less unstable than stocks and indexes and only slightly move in price. Is ETFs worth investing? A fantastic way to vary your investment portfolio is with an ETF. Whenever you participate in the stock market, you have a finite amount of equity options. Consult an expert advisor to get the right plan TALK TO AN EXPERT
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Top 8 Risks associated with ETFs

Top 8 Risks associated with ETFs

While you've seen how ETFs can be a good addition to your portfolio, there can be some risks associated with ETFs. Understanding any risks associated with your investment beforehand is always beneficial for you. Risks associated with ETFs Source: Freepik 1. Market risk   Often called systematic risk, this is the single most significant risk while investing in ETFs.   An ETF is a collection of its underlying securities. Thus, the movement of these securities in the stock market affects the ETF as well.   For instance, if an ETF is tracking the Sensex and it drops by 20%, nothing in the world can stop this ETF from also falling. No advantage of the ETF will harbor this fall but can cushion it, if not entirely prevent it.  2. 'See it before buying' risk  This type of risk is the second most significant risk associated with investing in ETFs. An investor should be very vigilant when choosing an ETF.   Given the current scenario wherein more than 7600 ETFs are trading in the stock markets worldwide, studying carefully and looking at its underlying assets before investing becomes a paramount prerequisite.  Several ETFs can be tracking the same sector but may vary considerably by their underlying assets.   For instance, an ETF tracking the pharmaceutical industry should follow next-gen pharma companies having innovation in R&D, along with a promising future.  Such an ETF will have a higher return compared to an ETF tracking the pharma sector (but not tracking such high-potential companies).   Hence, 'judging a book by its cover' risk becomes vital.  3. Counterparty risk  Counterparty risk is the probability that the counterparty in a transaction may not fulfill part of the deal and default on its obligations. An ETF can track the underlying index in two ways.   It holds the underlying securities   ETF swaps investor cash with a bank or financial institution for the index's performance.   The former is a physical ETF, and the latter is a synthetic ETF.   Both investments have a certain degree of counterparty risk, but the probability is minimal and somewhat higher in the second.   However, we must keep in mind that ETFs are extensively collateralized and safe.   4. Exotic-Exposure risk  As stated earlier, several types of ETFs are doing rounds in the market, including some very complex specialized ETFs like inverse ETFs and leveraged ETFs.   Such ETFs use complex strategies to invest money, which may not always pan out the way one hopes. Hence doing due diligence before investing in such exotic ETFs is indispensable.   Similar to ice cream, moving beyond traditional, plain, and time-tested flavors increases the risk of being left with a sour taste.  5. Shutdown risk  Several ETFs are floating on global markets, but the investors love not all; hence some close down! About 100 ETFs close down every year, thus leaving their investors high and dry.   When an ETF is closed down, the investors get compensation in cash after liquidating the fund's holdings. However, this isn't an enjoyable experience in general.   Improper tracking of records on the part of the fund can lead to several grievances and, most importantly, mental agony for the investor.  6. Hot-new-thing risk  ETFs launched with such pomp trick investors into subscribing to such ETFs without doing their due diligence. This risk needs to be countered by the investor's conscience.  One must thoroughly study the underlying assets and the tracking methodology without bias of the splendors advertising.   According to ETF.com, a rule of thumb is that the investment amount in an ETF should be inversely proportional to the press it gets.  7. Tax risk  ETFs can have different structures and strategies, resulting in differentiated tax liabilities.   Some ETFs may use an in-kind exchange mechanism and thus have lower capital gains tax liability than those that use complex derivatives to track the underlying index.   Therefore, this can hamper the investor's profits and tax non-tax liabilities. Unless an investor is entirely aware of the fund's work, they may be caught off-guard.  8. Trading risk  ETFs are listed on the stock markets and can be traded just like a regular stock; this comes with its own set of liquidity risks. An ETF might not be very liquid, thus casting a shadow over its trading ability; it's the first advantage.  An ETF having a small spread between bid prices is how to tackle this illiquidity problem. Some ETFs open with pomp and with time lose their sheen; thus, the illiquidity problem could set in.   Investors must vary of such ostentatious display by the ETFs - often called a Crowded- Trade risk but is related to trade ability risk.  ETFs deliver what they promise to deliver; reading the fine print is what differentiates an investor from a good investor FAQs What are the risks associated with ETFs? Here are some of the main risks associated with ETFs Market risk 'See it before buying' risk Counterparty risk Exotic-Exposure risk Shutdown risk Hot-new-thing risk Tax risk Trading risk Are ETFs riskier than funds? The degree of risk depends on the fund and ETF. Some are low-risk, medium and high. Its best to consult a professional before investing. What are the pros of investing in ETFs? The benefits of investing in ETFs are: Lower expense ratiosDiversification (similar to mutual funds) Tax efficiency Easy to trade just like stocks What is the biggest risk associated with ETFs? The biggest risk is a Market risk. If you buy S&P 500 ETF and the S&P 500 goes down then the loss is inevitable. Consult our expert to discuss the right plan for you. TALK TO AN EXPERT
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What is ADTV(average daily trading volume)? Limitations of ADTV

What is ADTV(average daily trading volume)? Limitations of ADTV

One of the essential criteria in technical analysis is volume. Let's look at how to compute the average daily trading volume, look at some instances, and see how to use it. What is ADTV or Average daily trading volume?  Investors refer to the number of shares of a specific stock that change hands on average during a single trading day as Average Daily Trading Volume (ADTV).   The average daily trading volume (ADTV) can be determined for five days, ten days, etc. The average trading volume for 20 or 30 days is a regularly used ADTV metric.  The average daily trading volume of a single stock, options on a stock, or market indexes like the Nasdaq 100 are all tracked.  The average daily value indicator is an alternative to the average daily trading volume indicator. The average daily value of a stock calculates the average dollar amount traded daily.  William O'Neil's 'How to Make Money in Stocks' popularized the use of average volume as one of several data sources for investing decisions.  O'Neil emphasized the importance of paying attention to average daily trading volume for two reasons: Ensure that a stock is liquid enough to trade fast To ensure that stock traders' present supply and demand are on your side  When a stock's price declines, its daily volume should be lower than the usual daily volume, indicating that selling pressure is easing.   When a stock's price has been consolidated and isn't growing much, you would like to see increasing volume as the prices begin to rise, indicating more buyers are entering the market. When a stock's price increases, you want the increased volume to suggest that it will continue to grow.  Average daily trading volume (ADTV) formula. How to calculate the average traded price? The formula for calculating a stock's average daily trading volume is exceptionally straightforward. Multiply the total trading volume for each day over the period you wish to compute the average volume by the number of trading days.  ADTV for α days =  Total volume traded during a day / α To make things even easier, you can use volume technical indicators to attach to a stock chart and choose the number of days you would want to estimate the average daily trade volume.   The technical indicator will calculate the average volume for you and update it every trading day. Source: Pixabay Why is trading volume important to investors?  1. Indicates the amount of curiosity in a stock/ETF.  The average daily trading volume is essential to stock market participants. The foremost thing is that trading volume measures how much interest all prospective stock traders have in a specific stock.  A low average trading volume for a company suggests that few individuals are monitoring or interested in it and that few financial institutions are committed to a position.   It usually means that market analysts agree that the stock has a limited chance of appreciating significantly at a price.  2. Indicates the amount of trade liquidity available.  The average daily trading volume also indicates how liquid a stock/trading ETF is.   Liquidity is significant for investors because it influences the bid and asks spread in the price of a stock/ETF, indicating how simple or difficult it is to enter or exit a position in the stock/ETF at an investor's desired price.  Stocks and ETFs with low trading volumes have wider bid/offer spreads, making it harder to enter or exit at the right price.   Stocks/ETFs with a high average trading volume, on the other hand, have narrower bid-ask spreads, making it more straightforward for investors to enter or leave trading positions at their preferred price.  3. Indicates whether a stock's/ETF's price levels offer support or resistance.  Finally, significant volume shifts frequently signal stock traders' price levels that constitute support or resistance for a stock/ETF.  Average daily trading volume limitations   A typical statistic for determining if a stock fits an investor's or trader's transaction requirements is the average daily trading volume. However, ADTV is standard.   An asset's volume can diverge significantly from the average on any particular day, resulting in much greater or lesser importance.  Over time, the average might change, rising, dropping, or oscillating. As a result, keep an eye on volume and average volume to ensure that the asset is still trading within the volume constraints you want.  Significant fluctuations in volume could indicate that something has evolved within the asset, which could be either positive or negative. The volume didn't reveal to you which one it is, but it will alert you that more investigation may be needed. How to use ADTV? To calculate the average daily trading volume, you can add the trading volume for the past X days. Then, divide the total by X. Example - the sum of the last 20 days' trading volume is 23844400, and upon dividing by 20, the ADTV is 1192220. Compare the ADTV with the trend to see if there is any sizable volume increase. If the volume changes significantly, the stock attracts more interest, which could be either bullish or bearish, depending on the price movement.  What is the difference between Average Daily Trading Volume (ADTV) and Open Interest? Open interest is a term used in futures and options, and it defines how many contracts are open and haven't been closed. In derivatives, the Average daily trading volume is the average number of contracts changing hands daily. ADTV and OI are entirely different and should not be mixed or used interchangeably. OI measures transactions used to open or close positions and thus tracks the number of open contracts. FAQs What is a high ADTV? Investors refer to the number of shares of a specific stock that change hands on average during a single trading day as Average Daily Trading Volume (ADTV). A high ADTV means that more investors in interested in that particular stock while a low means fewer investors are interested in some stocks. What is ADTV value? ADTV stands for Average daily trading volume. It tells us the average number of shares traded within a day in a given stock. How is ADTV calculated? Here is the formula for calculating ADTV for α days =  Total volume traded during a day / α Multiply the total trading volume for each day over the period you wish to compute the average volume by the number of trading days.  Why is trading volume important to investors?  The average daily trading volume is essential to stock market participants. The foremost thing is that trading volume measures how much interest all prospective stock traders have in a specific stock.  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
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