How to buy and sell ETFs: The ETFs are here to stay
Investors will be able to buy ETFs through the SEC and the NYSE this year, with ETFs going up for sale at the NYMEX, the Nasdaq and the Nascentus.
In the meantime, some investors are still waiting for ETFs to go on the market, with the biggest selling points being their long-term potential, low transaction costs and low transaction volatility.
“The stock market is volatile.
People don’t always think about it.
They may be willing to take on some risk to get their money,” said David Pinto, a portfolio manager at Verve Capital, a brokerage firm.
“But if you’re holding your money for a long time, you don’t really know how it’s going to perform.
You don’t have any idea how you’re going to pay for it.
You have to hold your money until you know what the market is going to do.”
Pinto said the riskier ETFs that go up for auction will be the ones that have more liquid assets.
For example, the Vanguard ETF, which has a market cap of $2.5 trillion, has a $1,100 annual return, according to Vanguard’s website.
That equates to a 12% return.
“The risk-adjusted return for Vanguard ETFs is 12% on average over the life of the ETF,” said Verve.
The Vanguard ETF is a great example of an ETF that investors should be looking for, Pinto said.
It has a higher return than the Vanguard Total Stock Market index, which tracks the S&P 500 index, a market in which ETFs have historically outperformed.
But that is not the only reason ETFs can be a good buy.
The ETF’s volatility is lower than other mutual funds, and the company that owns Vanguard will have to sell some of the assets it owns to make up for volatility.
ETFs don’t come with any extra fees.
And ETFs generally have less exposure to the S & P 500 index than traditional mutual funds do.
That can mean a more predictable performance, because ETFs tend to outperform stocks in the S;P; 500.
ETF stocks have been a big driver of the Semiconductor Index over the past two decades, but that index is also a big player in the energy sector, where ETFs account for more than 20% of its assets.
“We’re a big energy investor.
We’re a diversified investor,” said Pinto.
“We’re an industry that likes to invest.
And we like the low risk of a lot of the investments we buy.”
Investors may also be interested in the Vanguard and the SPDR S&p 500 ETFs, which are both on the NYMSEX.
The NYMex is expected to begin listing these ETFs next month.
The Dow Jones Industrial Average ETF (DJIA) is up 9% this year to 2,842.9 points, while the S-P-E Composite Index ETF (SPX) is at 7,726.5 points.