Are ETFs a Good Choice for Your Portfolio?

Investing in the form of an ETF is a well-known alternative to investors when it comes to ROI – short term and long term.

ETFs allow you to buy and sell instruments the same way you buy and sell stocks. This is unlike traditional Mutual Funds, which only allow you to trade only at the end of the business day.

The combination of immediate diversification and proper liquidity is a good enough reason to think that ETFs would be a good choice for your portfolio.

Like all investments, ETFs are accompanied by risk. Higher risk would lead to more profits and ETFs follow this rule very closely. A variety of broad-market and government-focused funds tend to be the most risk-free investment. Boring.

Commodities, options and narrow funds usually lead to greater risk and volatility. Volatility is Our blood.

ETF evaluation metrics:

  • – You can understand how well an ETF performs by seeing how much money it charges for fees, management, etc. and compare it to how well it “replicates” the sector it follows.
  • An ETF that charges little money for fees and “breathes down the neck” of its respective index is an ETF that is highly efficient.
  • AuM (Assets Under Management) – is an important bullet point for your proper orientation on the health and stability of an ETF.
  • Top Distributions (Country, Sector, Holdings) – ETFs are required to announce where the fund’s money is invested. This helps you understand with greater clarity your exposure to the assets, sectors and regions in which you invest.

The idea is to invest in low-cost ETFs. The lesser the expenses, the more money can be retained by investors. For example, if the ETF you selected generated 10% in one year but charged 1%, you would retain 9% as an investor.

ETFs with low cost ratios would be between 0.05% and 0.25%. A high ratio would be 0.70% – 1.0%. According to The Wall Street Journal, the average is 0.44%.

Examining the factors that affect Your portfolio

The most immediate portfolio dependent factor is the composition of the fund. It matters whether the ETF follows Dow Jones or Nikkei. It matters whether the ETF holds government bonds or uses leverage. More importantly, a proper valuation of the underlying assets cannot be made without understanding their role in your portfolio.

For example, you probably wouldn’t want to buy an ETF that tracks the SPX500 if your main portfolio is built by Mutual Funds that track the SPX500. It is a better idea to choose another index to attempt ​​increasing diversification and / or reducing the correlation between assets.

Lucrative ETFs, segmented by SECTORS:

  1. Technology Sector – Investments in technology is usually associated with aggressive growth investments. You can find a shortened list of Varchev Finance ETFs here.
  2. Financial Sector – consists mainly of banks and credit card companies. You can find a shortened list of Varchev Finance ETFs here.
  3. Consumer Cyclicals – Consumer cyclicals are those that are not considered necessary. Also referred to as leisure and luxury goods and services, their consumption depends on economic cycles, respectively “cyclical”. You can find a shortened list of Varchev Finance ETFs here.
  4. Consumer Staples – Consumer goods are products such as food, tobacco and beverages that consumers consider essential to daily life. Such companies are “defensive” or “non-cyclical” because consumers do not want to stop buying and consuming their products even during an economic downturn. You can find a shortened list of Varchev Finance ETFs here.
  5. Utilities – Utility is an economic term that generally refers to the ability to satisfy needs or desires; it describes the usefulness of a good or service. For this reason, companies producing goods or services providing consumer benefits are classified in the industrial utility sector. You are already familiar with utilities in your daily life and you probably associate the term with your “bills” that refer to daily services, including telephone, gas, water and electricity. You can find a shortened list of Varchev Finance ETFs here.
  6. Healthcare – Healthcare is a stock investing sector that focuses on the healthcare industry. The healthcare sector is quite broad. Even a person with no investment experience can think of a specific area of ​​the healthcare industry, such as hospital conglomerates, institutional services, insurance companies, drug manufacturers, biomedical companies, or medical device manufacturers. You can find a shortened list of Varchev Finance ETFs here.

You can find the full description to our ETFs only on our Varchev Absolute Traders platform.

Hotline consultation for the most profitable ETF investments – (02) 954 51 15 – and ask about our exclusive ETFs.

 Varchev Traders

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