ETFs (Exchange Traded Funds) provide instant diversification in your trading.  Trading an ETF can result in a basket of stocks that allows the trader to capture the movement of a specific sector or index with one click of the mouse.  Many ETFs are highly liquid with literally millions of shares exchanged daily and with $1 strikes and narrow bid/ask spreads.  The ETF allows the trader to also escape specific company risk which is appealing in this unstable environment. 

A survey 840 investment professionals conducted by State Street Global Advisors and Knowledge@Wharton, the online business journal of The Wharton School at the University of Pennsylvania revealed that “67% of the advisors identified ETFs as the most innovative investment vehicle of the last two decades and 60% reported that ETFs have fundamentally changed the way they construct investment portfolios.”  The survey went on to say that “The top five most appealing characteristics of ETFs as ranked by the financial advisors include:

1)      Low Cost

2)      Liquidity

3)      Intraday Trading

4)      Tax Efficiency

5)      Investment Style Purity *

 It may be worth the effort to explore the world of ETFs.  There are more ETFs being added every year.  You have the ability of investing in the major indexes, emerging markets, specific economies, sectors as well as inverse plays on the indexes.  ETFs have certainly come of age.  Best, Robin

*Source, Business Wire, a Berkshire – Hathaway Company June 10, 2008.

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