Exchange-traded funds or ETFs are a type of fund that owns the underlying assets (stocks, commodities, bonds, etc.) and divides ownership of those assets into shares. ETFs are bought and sold like shares on a stock exchange, but unlike conventional shares, they are not businesses, but rather investment funds that can invest in a number of things. ETFs are one of the fastest growing categories of investment products in the world with over $USD 3 trillion in funds held and have been around since the late 1980s. They are popular among both institutional and individual investors as they offer a wide array of benefits for investors.
Looking to invest in the share market but not sure which stocks to buy?
ETFs could be the solution for you. Here are some popular ETFs to gain direct access to the U.S. Share market.
The S&P 500 Index – is an American stock market index based on the market capitalizations of the 500 largest companies listed on the NYSE or NASDAQ. It is perhaps the best depiction of the U.S. economy, covering all the main sectors and representing approximately 80% of the nation’s market cap. Here are the most popular ETFs you can invest in to gain exposure.
SPY SPDR S&P 500 ETF TRUST (Market: USA)
IVV ISHARES CORE S&P 500 ETF (Market: USA)
VOO VANGUARD S&P 500 ETF (Market: USA)
• ( SPY) This is the oldest of the S&P500 benchmarked funds and the largest in terms of AUM ($280.33 billion). It is also extremely liquid with average trading volume of nearly 16 billion per day.
• ( IVV) This delivers tight benchmark performance and is managed by BlackRock Fund Advisors. Still very liquid for every class of investor and USD$161.13 billion in funds under management.
• ( VOO) The newest of these three ETF’s and in all honesty there’s not a lot that is different. It has low costs and high liquidity and large cap coverage.
The Dow Jones Industrial Average (DJIA) – Often called the Dow, this index began in 1896 and is considered the primary indicator of the health of the financial market. It is made up of only 30 stocks, considered the best blue-chip companies in America, and holds popular names like Nike, McDonalds, Microsoft, Apple and many more. Investors looking to profit from bullish perspectives on the Dow can invest in the index through ETFs. This allows you to track the performance of the 30 stocks through one investment. Here are some popular ETFs that track the Dow.
DIA SPDR DJIA TRUST (Market: USA)
DDM PROSHARES ULTRA DOW30 (Market: USA)
UDOW PROSHARES ULTRAPRO DOW30 (Market: USA)
• ( DIA) This is a reliable ETF for replicating the performance of the Dow. It was launched in 1998 and has a history of tracking the index accurately. This ETF invests in all the stocks of the Dow, and weights them similar to the underlying index.
• ( DDM) This leveraged ETF that seeks to replicate two times the daily performance of the DJIA
• ( UDOW) This fund uses leverage to replicate three times the daily performance of the DJIA
The NASDAQ – Is an American stock exchange and the second-largest exchange in the world by market capitalization. It was founded in 1971 and has a focus on the technology sector. It provides investors exposure to the high-risk, high-reward technology sector and includes companies such as Facebook (FB), Apple (AAPL), Netflix (NFLX), Amazon (AMZN) and many more. You can gain exposure to the NASDAQ through ETFs. Some popular ones are listed below.
QQQ INVESCO QQQ TRUST SERIES 1 (Market:USA)
ONEQ FIDELITY NASDAQ COMP INDX TS (Market:USA)
• ( QQQ) QQQ trust is one of the oldest and most widely traded ETFs in the world. The fund is weighted heavily toward large-cap growth companies (over 50%).
• ( ONEQ) this Fidelity ETF has attempted to replicate the Nasdaq Composite Index. Almost 93% of its holdings are common stock included in the index, and more than 97% of the assets represent domestic companies.