The advent of Exchange Traded Funds (ETFs) has brought a new way to use AIM on various Market Sectors. They offer an easy way to own and trade entire sector indexes without the expense and inconvenience of the typical open end mutual fund. Closed End ETFs (CEFs) offer yet another interesting alternative and some extra BETA because of their Premium/Discount range.

With AIM, we like to make our trades when the price/per share meets our requirements. With traditional mutual funds we never know exactly what the end of the day will bring - but that's what the basis of our our trade price will be. Using ETFs we can use "Good 'til Cancelled" Limit Orders to trade when our price is met, or trade any time during the day at the current bid/ask prices.

Diversified mutual funds usually don't have the ingredients that AIM likes - Frequency and Amplitude of price change. This is because their money is spread over many different business sectors of the economy all moving in their own directions. Individual sector funds look as though they will give us many more opportunities to capture volatility than do traditional diversified mutual funds. As this graphic shows, individual sectors perform well at different times in the economic and market cycles.

 


ETFs can be selected from a wide variety of industrial sectors, individual country funds and also from "value" or "growth" by size of capitalization. This offers us the chance to build a portfolio of our own that is easily as diversified as any mutual fund. If we use ETFs we preserve much of the frequency and amplitude of each sector that AIM uses for creating trading profits. Each sector seeks its own level while AIM adjusts properly for the changes. Overall the portfolio benefits from extensive diversification while also improving AIM trade related returns.

An interesting article on building the "ultimate buy-and-hold" portfolio can be read at:

http://www.fundadvice.com/articles/buy-hold/the-ultimate-buy-and-hold-strategy.html 

Constructing an ETF portfolio using the component ideas mentioned in the article would give an individual a very well diversified portfolio.

GENERAL INFORMATION ON ETFs
http://quotes.nasdaq.com/asp/ETFsHome.asp

LOOK UP SPECIFIC INDUSTRIAL SECTORS AS ETFs
http://quotes.nasdaq.com/asp/ETFsSector.asp

POWERSHARES ETF SITE
http://www.powershares.com/

INFORMATION ON ETFs
http://www.etfguide.com/etftickerguide.php

MOST POPULARLY TRADED
http://money.cnn.com/funds/etf/mostpop/

HEATMAP OF ETFs
http://screening.nasdaq.com/Heatmaps/Heatmap_ETF.asp

SPECIFIC INFORMATION ON CLOSED END ETFs (CEFs)
http://www.etfconnect.com/

TOM'S RETIREMENT ACCOUNT BUILT WITH ETFs
http://www.aim-users.com/etfunds.htm

EXAMPLE OF NON-U.S. ETF PORTFOLIO
http://www.aim-users.com/exusetf.htm

MORE ON A.I.M. (Automatic Investment Management)
IHub - http://www.investorshub.com/boards/board.asp?board_id=949
Web Site - http://www.aim-users.com/

Best regards, Tom