ETF Hub
What is an ETF?
ETF stands for Exchange Traded Funds, an open-ended stock fund that tracks market indices and can be freely traded on exchanges.
ETF can be understood as a special form of fund: publishers buy all the stocks tracked by an index(or other targets), merge them together to form a new fund, and then divide them into small pieces and sell them on the stock market. They become ETF index funds that can be freely bought and sold. Buying this ETF is equivalent to buying all the stocks of this index.
Why are ETFs suitable for ordinary investors?
The advantage of ETFs is that they allow ordinary investors to invest in multiple assets at the same time, with high liquidity and flexibility, and low management fees.
ETFs are particularly suitable for medium and long-term investors because they value the "trend" the most and do not have the energy to study the performance of various companies. They do not want to see their investment portfolio fluctuate greatly due to unexpected events. Such investors can choose several ETFs with good liquidity, buy them when the price is appropriate, and sell them after the trend reverses. The number of transactions per year is small, the risk is relatively low, and they can sleep well.
How to choose the right ETF?
Three steps: clear direction and goals, develop strategies, and learn to screen.
The first step is to clarify the investment direction and goals. You need to think about: how long is your Time Horizon? Do you want to pursue relatively low but stable returns or relatively high but volatile returns? Are you familiar with a specific industry? Think through these three questions before moving on to the next step.
Step two, develop a strategy. Regular investment is a good strategy for beginners. Buying continuously for a period of time is beneficial for sharing investment costs, smoothing returns, and ensuring investment discipline. After passing the novice stage, you can turn to more complex strategies, such as swing trading and industry rotation strategies.
Step three, learn to filter. You need to understand three common indicators: A. Trading volume: It is best to choose ETFs with higher trading volume, which have the best liquidity and are easy to buy or sell at the desired price. B. Cost: Choose ETFs with lower costs, but not overly demanding. Some ETFs with higher costs perform well, and profits far more than make up for the costs. C. Past Performance: Although past performance does not represent future returns, it can give you a relatively reasonable estimate of returns.
If you are a beginner and want to diversify your investments with less risk, you can choose index ETFs; if you want to invest in a single theme, such as semiconductors, electric vehicles, AI, and can bear greater risks, you can choose corresponding industry ETFs based on your personal favorite theme.
What are the categories of ETFs?
According to different classification methods, ETFs can be divided into passive & active ETFs, bond & stock & commodity & currency ETFs, forward & reverse ETFs, etc.
Passive ETFs replicate the performance of a security index (such as the S&P 500 index, Nasdaq index, etc.) to obtain a return rate that is basically the same as that of the index; actively managed ETFs are funds managed by fund companies, which is equivalent to giving money to fund managers to trade stocks on their behalf.
According to the classification of targets, stock ETFs are the most common; currency ETFs mainly track the trend of currency exchange rates; bond ETFs are mainly in the bond market, and the returns depend on the performance of the underlying bonds; commodity ETFs include related ETFs such as oil, gold, and silver.
Classified by direction, forward ETFs such as the S&P 500 ETF track the rise and fall of the S&P 500 index. Theoretically, when the index rises by 1%, the ETF also rises by 1%. Reverse ETFs such as shorting the S&P 500 also track the S&P 500 index, but in the opposite direction. Theoretically, the S&P 500 index rises by 1%, the ETF falls by 1%, the S&P 500 index falls by 1%, and the ETF rises by 1%.
What is Stock Index ETF?
Stock index ETF is an ETF that tracks a certain stock index. Taking the US stock market as an example, the four major indices currently are the Dow, NASDAQ 100, S&P 500, and Russell 2000.
Among them, the Dow Jones Industrial Average, one of the oldest indices in the US stock market, is an indicator for measuring overall market performance; the Nasdaq 100 Index, with 100 Constituent Stocks all featuring high-tech, high-growth, and non-financial characteristics, represents US technology stocks; the S&P 500 Index is an overall measure of the US 500 Listed Companies, which can show the rise and fall of the US economy; and the Russell 2000 Index represents small and medium-sized enterprises. It can be called a "barometer for small and medium-sized enterprises".
What is Industry ETF?
In recent years, themed investments in US stocks have become increasingly popular, with trends in electric vehicles, the Metaverse, and even ChatGPT themes emerging one after another, and related targets emerging one after another. Not sure how to choose specifically? The easiest way is to start with industry ETFs.
Industry ETF is an ETF fund that invests in a specific industry. If you are optimistic about a certain industry, you can choose to invest in ETFs that track that industry, eliminating the need for stock selection and obtaining the overall returns of that industry.
The advantage of industry ETFs is that if chosen correctly, it is possible to achieve returns higher than the market average; but the disadvantage is also obvious. Because the bet is on a specific industry, once the high level enters or encounters a downturn in the industry, it will waste time and Sunk Cost.
The current 10 major industries in the US stock market include optional consumption, mandatory consumption, energy, finance, healthcare, industry, raw materials, technology, public utilities, and real estate. Their tracking targets are all Dow Jones and S&P Constituent Stocks.
What is Leveraged ETF?
Leveraged ETFs, also known as multiple ETFs, achieve the effect of tracking index multiples by holding a basket of underlying derivatives, like magnifying glass, which amplifies returns and risks.
Compared to aggressive leveraged tools such as stock index futures and margin financing, leveraged ETFs have the advantage of lower entry barriers, both for capital and for professional requirements. They have no position restrictions, no need to pay margin, and lower operational risks. For investors pursuing leveraged investment, they are more efficient and convenient.
However, it should also be noted that leveraged ETFs refer to the daily rise and fall of the relevant index, rather than the cumulative rise and fall over a period of time. Since the derivatives used to create leverage come from financing and daily position adjustments, they are only suitable for intraday operations and not for long-term holding, otherwise it may lead to unnecessary losses.
What is Short ETF?
We all know that although the long-term trend of major US stock indexes is upward, they will also encounter short-term violent adjustments or long-term stagnation. If encountering a bear market, investors can not only bear fluctuations and floating losses, but also actively respond and even profit from them. One of the most commonly used tools is reverse exchange-traded funds, that is, shorting ETFs.
It is also called an inverse ETF, which uses derivative contracts to profit from the decline of underlying assets or market indices. It is a dead enemy of related assets. It rises as much as related assets fall, and falls as much as related assets rise. Compared to selling short or buying put options, the biggest advantage of inverse ETFs is their simplicity and ease of operation, making them more popular with some investors.
It should be noted that shorting ETFs refers to the daily fluctuations of the relevant index, rather than the cumulative fluctuations over a period of time. Therefore, it is only suitable for intraday operations and not for long-term holding, otherwise it will lead to unnecessary losses.
Which categories of ETF StockLists does RockFlow currently support for trading?
Currently, RockFlow supports trading in Industry ETFs, Stock & Index ETF, FICC (fixed income, forex, commodity) ETF, Selected ETF Strategy, and Featured ETF.
Industry ETF: Select high-quality ETFs from specific industries. If investors are optimistic about a certain industry, they can choose to invest in ETFs that track that industry, avoiding the stock selection process and obtaining the overall returns of the industry. Currently, industry ETFs that are highly concerned include Bitcoin spot ETF shares, Semiconductor ETFs, etc.
Stock & Index ETF: It includes the most popular individual stock leveraged ETF stock orders and stock index ETF stock orders from around the world such as the US, China, South East Asia, and Latin America. In addition, multiple actively managed ETF stock orders launched by ARK Fund are also included.
FICC ETF: It includes various bond ETFs, currency ETFs, and commodity ETFs such as gold and silver that have received the most attention in the market recently. With good liquidity and low management fees, it is suitable for investors who are optimistic about related products.
Selected ETF Strategy: This stocklist is generated by our financial mathematics and investment research team, based on macroeconomic trends and the economic conditions of various countries. Our goal is to provide you with investment strategies based on in-depth insights and rigorous calculations, helping you maintain a leading position in uncertain market environments and achieve long-term investment value growth. This ETF includes global multi-asset ETF strategy, stock index ETF strategies, and macro theme ETF strategy.
Featured ETF: The featured ETF stock list aggregates leveraged ETFs, reverse ETFs, multiple Ark Fund ETFs under the Wood Sister, and other interesting ETFs. They can help investors execute a variety of special investment strategies, resulting in unexpected returns.