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Last Post: 1/28/2021 11:24:36 PM - Followers: 39 - Board type: Free - Posts Today: 0

 

What Is an ETF?

An exchange-traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. ETFs are in many ways similar to mutual funds; however, they are listed on exchanges, and ETF shares trade throughout the day just like an ordinary stock.

 

A well-known example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index. ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types. An exchange-traded fund is marketable security, meaning it has an associated price that allows it to be easily bought and sold.

 

KEY TAKEAWAYS

  • An exchange-traded fund (ETF) is a basket of securities that trade on an exchange, just like a stock.
    ETF share prices fluctuate all day as the ETF is bought and sold; this is different from mutual funds that only trade once a day after the market closes.1?
    ETFs can contain all types of investments including stocks, commodities, or bonds; some offer U.S. only holdings, while others are international.
    ETFs offer low expense ratios and fewer broker commissions than buying the stocks individually.

An ETF is called an exchange-traded fund since it's traded on an exchange just like stocks. The price of an ETF’s shares will change throughout the trading day as the shares are bought and sold on the market. This is unlike mutual funds, which are not traded on an exchange, and trade only once per day after the markets close. Additionally, ETFs tend to be more cost-effective and more liquid when compared to mutual funds.


ETF vs. ETN: What's the Difference?

Exchange-traded funds (ETFs) are the hottest financial investment vehicle since the mutual fund. In fact, the investment product is on track to replace mutual funds with its often-lower fee structure and easier-to-understand stock-like price action.

 

ETFs have a not-so-well-known cousin. The exchange traded note (ETN) is something that many retail investors may not know about. It is time to shed some light on the ETN and decide if this product has a place in your portfolio.

 

Exchange Traded Fund – ETF

In practice, the two are very similar. Both are designed to track an underlying asset, both often have lower expense ratios than actively managed mutual funds, and both trade on the major exchanges just like stock.

 

The main difference is under the hood. When you invest in an ETF, you are investing in a fund that holds the asset it tracks. That asset may be stocks, bonds, gold or other commodities, or futures contracts.

 

Exchange Traded Note – ETN

An ETN is more like a bond. It's an unsecured debt note issued by an institution. Just like with a bond, an ETN can be held to maturity or bought or sold at will, and if the underwriter (usually a bank) were to go bankrupt, the investor would risk a total default.

 

For that reason, before investing in an ETN, research into the credit rating of the underwriter is an important metric. If the underwriter were to receive a credit downgrade, shares of the ETN would likely experience a downturn unrelated to the underlying product it's tracking.

 

Because an ETN doesn't buy and sell assets within the funds like an ETF, taxes are not triggered until the fund is sold, often years later. This will trigger long-term capital gains (which have a lower tax rate) rather than short-term capital gains.?

 

Don't count out ETNs. These funds are more efficient than some ETFs and have, at least for now, favorable tax treatment for longer-term investors.

Key Differences

Another advantage of ETN investing is the lack of tracking errors. There are more than 7,000 ETFs currently on the market.2? They achieve varying levels of success when tracking their respective indexes. Because of expenses, investors will notice some amount of divergence from the index they track, making the fund underperform the index over time.

 

This does not happen with ETNs. Because an ETN does not rely on the buying and selling of the underlying asset, expenses are not amassed. An ETN simply pays investors once the fund matures based on the price of the asset or index. There's no tracking error because the fund itself isn't actively tracking. Market forces will cause the fund to track the underlying instrument, but it's not the fund doing the tracking.

 

Which Is Better?

If you follow the age-old rule that says you should invest only into what you understand, ETFs are a better choice. Part-time investors have an easier time understanding products with stock-like characteristics. Since an ETN has bond-like characteristics, it's more complicated.

 

The most popular exchange-traded products are ETFs. One of the most popular ETNs is the JP Morgan Alerian MLP Index ETN (AMJ), which has an average volume of a little over 4.5 million shares.3? The SPDR S&P 500 (SPY) ETF, by contrast, has an average daily volume of over 168 million shares.4? This clearly shows that investor appetite is heavily weighted toward ETFs.

 

The Bottom Line

ETFs are exponentially larger in collective volume than ETNs, but much like stocks versus bonds, stocks receive more attention from retail investors because they are easier to understand. Deciding that ETNs are right for your portfolio is appropriate, provided you have done the research and gained an appropriate level of understanding with which to make that determination.



How Leveraged ETFs and ETNs Work

Inverse ETFs and inverse ETNs may be also be leveraged, meaning, in this case, they aim to offer a return 2x or 3x the inverse return of their underlying benchmark, before fees.4? Leveraged ETPs offer multiples of the returns or the reverse of the returns of their benchmark, but they also may produce losses that are multiples of the typically expected losses. It's possible to quickly lose the entire value of your investment.

 

Inverse ETFs and ETNs aren't for investors who don't intend to actively monitor and manage their portfolios. You should conduct thorough research before you commit money to inverse ETFs, inverse ETNs, or any other investment.

Inverse ETFs

There are many inverse ETFs to consider. Here are several that you can add to your portfolio if you feel they're right for your investment strategy.

 
  • DDG: ProShares Short Oil & Gas ETF
    DOG: ProShares Short Dow30 ETF
    EFZ: ProShares Short MSCI EAFE ETF
    EUM: ProShares Short MSCI Emerging Markets ETF
    MYY: ProShares Short MidCap400 ETF
    PSQ: ProShares Short QQQ ETF
    REK: ProShares Short Real Estate ETF
    RWM: ProShares Short Russell2000 ETF
    SBB: ProShares Short SmallCap600 ETF
    SBM: ProShares Short Basic Materials ETF
    SEF: ProShares Short Financials ETF
    SH: ProShares Short S&P500 ETF
    SJB: ProShares Short High Yield ETF
    TBF: ProShares Short 20+ Year Treasury ETF
    TBX: ProShares Short 7-10 Year Treasury ETF
    TYBS: Direxion Daily 20+ Year Treasury Bear 1X Shares ETF
    UDN: Invesco DB US Dollar Index Bearish Fund ETF
    YXI: ProShares Short FTSE China 50 ETF
 

Leveraged Inverse ETFs

Here are several -2x and -3x leveraged inverse ETFs. These products come with lots of risk and may not be right for every investor.

 
  • BIS: ProShares UltraShort Nasdaq Biotechnology ETF (-2x)
    CROC: ProShares UltraShort Australian Dollar ETF (-2x)
    DRIP: Direxion Daily S&P Oil & Gas Exploration & Prod. Bull and Bear 2X Shares ETF (-2x)
    DUG: ProShares UltraShort Oil & Gas ETF (-2x)
    DUST: Direxion Daily Gold Miners Index Bull and Bear 2X Shares ETF (-2x)
    DXD: ProShares UltraShort Dow30 ETF (-2x)
    EDZ: Direxion Daily MSCI Emerging Markets Bull and Bear 3X Shares (-3x)
    EEV: ProShares UltraShort MSCI Emerging Markets ETF (-2x)
    EFU: ProShares UltraShort MSCI EAFE ETF (-2x)
    ERY: Direxion Daily Energy Bull and Bear 2X Shares ETF (-2x)
    EUO: ProShares UltraShort Euro ETF (-2x)
    EWV: ProShares UltraShort MSCI Japan TEF (-2x)
    FAZ: Direxion Daily Financial Bull and Bear 3X Shares ETF (-3x)
    FXP: ProShares UltraShort FTSE China 50 ETF (-2x)
    GLL: ProShares UltraShort Gold ETF (-2x)
    KOLD: ProShares UltraShort Bloomberg Natural Gas ETF (-2x)
    LABD: Direxion Daily S&P Biotech Bull and Bear 3X Shares ETF (-3x)
    MZZ: ProShares UltraShort MidCap400 ETF (-2x)
    PST: ProShares UltraShort 7-10 Year Treasury ETF (-2x)
    QID: ProShares UltraShort QQQ ETF (-2x)
    REW: ProShares UltraShort Technology ETF (-2x)
    RXD: ProShares UltraShort Health Care ETF (-2x)
    SCC: ProShares UltraShort Consumer Services ETF (-2x)
    SCO: ProShares UltraShort Bloomberg Crude Oil ETF (-2x)
    SDD: ProShares UltraShort SmallCap600 ETF (-2x)
    SDOW: ProShares UltraPro Short Dow30 ETF (-3x)
    SDP: ProShares UltraShort Utilities ETF (-2x)
    SDS: ProShares UltraShort S&P500 ETF (-2x)
    SIJ: ProShares UltraShort Industrials ETF (-2x)
    SZK: ProShares UltraShort Consumer Goods ETF (-2x)
    SRS: ProShares UltraShort Real Estate ETF (-2x)
    SRTY: ProShares UltraPro Short Russell2000 ETF (-3x)
    SSG: ProShares UltraShort Semiconductors ETF (-2x)
    SMDD: ProShares UltraPro Short MidCap400 ETF (-3x)
    SMN: ProShares UltraShort Basic Materials ETF (-2x)
    SOXS: Direxion Daily Semiconductor Bull and Bear 3X Shares ETF (-3x)
    SPXS: Direxion Daily S&P 500 Bull and Bear 3X Shares ETF (-3x)
    SPXU: ProShares UltraPro Short S&P500 ETF (-3x)
    SQQQ: ProShares UltraPro Short QQQ ETF (-3x)
    TBT: ProShares UltraShort 20+ Year Treasury ETF (-2x)
    TYO: Direxion Daily 7-10 Year Treasury Bull and Bear 3X Shares ETF (-3x)
    TZA: Direxion Daily Small Cap Bull and Bear 3X Shares ETF (-3x)
    TMV: Direxion Daily 20+ Year Treasury Bull and Bear 3X Shares ETF (-3x)
    TTT: ProShares UltraPro Short 20+ Year Treasury ETF (-3x)
    TWM: ProShares UltraShort Russell2000 ETF (-2x)
    YCS: ProShares UltraShort Yen ETF (-2x)
    ZSL: ProShares UltraShort Silver ETF (-2x)
 

Inverse ETNs

Below are several inverse ETNs to consider if you feel they'd be a good addition to your portfolio.

 
  • BTYS: iPath Series B US Treasury 10-Year Bear ETN
    DFVS: iPath US Treasury 5-Year Bear ETN
    DLBR: VelocityShares Short LIBOR ETN
    DLBS: iPath US Treasury Long Bond Bear ETN
    DTUS: iPath US Treasury 2-Year BearETN
    FLAT: iPath US Treasury Flattener ETN
    GNAF: MicroSectors FANG+ Index Inverse ETN
    KNAB: MicroSectors U.S. Big Banks Index Inverse ETN
    TAPR: Barclays Inverse U.S. Treasury Composite ETN
    XXVFF: iPath Inverse S&P 500 VIX Short-Term Futures ETN
    YGRN: MicroSectors U.S. Big Oil Index Inverse ETN
    ZIV: VelocityShares Daily Inverse VIX Medium-Term ETN
 

Leveraged Inverse ETNs

Here are several -2x, and -3x leveraged inverse ETNs. These products come with lots of risk and may not be right for every investor.

 
  • BNKD: MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN
    BNKZ: MicroSectors U.S. Big Banks Index -2X Inverse Leveraged ETN
    DGAZ: VelocityShares 3x Inverse Natural Gas ETN
    DGLD: VelocityShares 3x Inverse Gold ETN
    DRR: Market Vectors Double Short Euro ETN
    DSLV: VelocityShares 3x Inverse Silver ETN
    FNGD: MicroSectors FANG+ Index -3X Inverse Leveraged ETN
    FNGZ: MicroSectors FANG+ Index -2X Inverse Leveraged ETN
    NRGD: MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN
    NRGZ: MicroSectors U.S. Big Oil Index -2X Inverse Leveraged ETN


CANNABIS ETF FUNDS

https://etfdb.com/themes/marijuana-etfs/

BULL

MJ - ETFMG Alternative Harvest ETF
HMLSF - Horizons Marijuana Life Sciences ETF
MSOS - AdvisorShares Pure U.S. Cannabis ETF 100% USA
HMMJ - Horizons Medical Marijuana Life Science ETF (TSX)
YOLO - Advisor Shares Pure Cannabis ETF 50% USA 33% CA
MJJ - Indxx MicroSectors Cannabis Index ETN
THCX - Cannabis ETF cultivation production distribution
TOKE - Cambria Cannabis ETF
ACT - AdvisorShares Vice ETF
POTX - Global X Cannabis ETF invested in the pharmaceutical industry.
CNBS - Amplify Seymour Cannabis ETF

LEVERAGED

HMJU.TO - Horizons BetaPro Marijuana Companies 2X Daily Bull ETF
MJO - MicroSectors Cannabis 2X Leveraged Bull ETN

INVERSE

HMJI.TO - Horizons BetaPro Marijuana Companies Inverse ETF


 
PostSubject
#666   Checkout NRGU JohnCM 01/28/21 11:24:36 PM
#665   CANNABIS EFT FUNDS JohnCM 01/27/21 10:27:21 AM
#664   https://ih.advfn.com/p.php?pid=staticchart&s=A%5ESPXS&t=37&p=6&dm=0&vol=0&w JohnCM 01/12/21 06:33:00 AM
#663   SPXS R/S starbuxsux 01/11/21 10:24:01 AM
#662   Home > Boards > Other Markets > ETFs JohnCM 12/14/20 04:51:51 AM
#661   Cambria Cannabis ETF (TOKE) JohnCM 12/08/20 01:16:30 AM
#660   TOKE Cambria Cannabis ETF JohnCM 12/08/20 12:33:17 AM
#659   I like the TNA idea. JohnCM 06/09/20 03:09:50 PM
#658   GAMING AND ESPORTS JohnCM 05/31/20 05:20:31 PM
#657   Yahoo Finance: Most Popular ETFs Since Market Bottom. JohnCM 05/19/20 09:48:24 AM
#656   Definitely an opportunity. rmepilot 05/17/20 11:02:18 PM
#655   Quite an interesting read. Very valid points made. maent 05/17/20 10:43:40 PM
#654   Cloud Computing ETFs to Gain on the New JohnCM 05/17/20 01:18:22 PM
#653   TRIPLE BOTTOM!! JohnCM 05/13/20 03:38:33 PM
#652   Added more on the drop back today. Still maent 05/01/20 12:58:14 PM
#651   First, look at recent news releases from the JohnCM 04/30/20 11:42:19 PM
#650   NRGU. JohnCM 04/30/20 11:40:58 PM
#649   I'm curious as well. rmepilot 04/30/20 01:01:40 PM
#648   What do you think of UGAZ? Any potential here? JAMISON007 04/30/20 12:41:45 PM
#647   John, maybe you can explain the NRGU and maent 04/27/20 03:09:53 PM
#646   Will USO be in play after the R/S tomorrow? maent 04/27/20 08:05:06 AM
#645   I'm in USL..cost basis $10.15 starbuxsux 04/24/20 11:24:24 AM
#644   UWTIF RIP JohnCM 04/23/20 11:26:44 PM
#643   I figured as much, but thanks for the rmepilot 04/23/20 04:21:32 PM
#642   No. JohnCM 04/23/20 04:17:50 PM
#641   Not the 3 that I selected. JohnCM 04/23/20 04:16:12 PM
#640   Ouch. rmepilot 04/23/20 02:37:13 PM
#639   Yahoo Finance: Credit Suisse AG Announces That the JohnCM 04/23/20 02:30:09 PM
#638   Seeking Alpha: 2 Warnings From Crude Oil - JohnCM 04/23/20 02:29:36 PM
#637   Looking at the way shale companies are moving, maent 04/23/20 10:02:46 AM
#636   I am starting to nibble. All three tickers JohnCM 04/22/20 06:10:09 PM
#635   How we are not under $2 on NRGU maent 04/22/20 05:26:23 PM
#634   CRUDE BOTTOM JohnCM 04/22/20 01:02:52 PM
#633   The problem with it is that they don't maent 04/21/20 11:48:17 PM
#632   Why is GUSH taking off? JohnCM 04/21/20 09:08:17 PM
#631   Although I like the idea of a "pure JohnCM 04/21/20 07:02:57 PM
#630   I am going to look into these in depth. JohnCM 04/21/20 06:51:14 PM
#629   From what I read on USO strategy, it maent 04/21/20 05:24:58 PM
#628   Pure play on monthly Crude oil contracts. JohnCM 04/21/20 05:21:39 PM
#627   I am actually lightening my exposure to NAIL JohnCM 04/21/20 05:04:37 PM
#626   Why are NRGU UCO ERX buys and USO JohnCM 04/21/20 05:02:32 PM
#625   Also watching NAIL. Its close to a bottom maent 04/21/20 04:13:03 PM
#624   I believe we will see a bottom on maent 04/21/20 04:11:55 PM
#623   CRUDE NRGU 2.26 UCO 12.82 ERX 11.43 TOTAL JohnCM 04/21/20 02:22:30 PM
#622   ETF ETN not "buy and hold!" JohnCM 04/21/20 02:04:14 PM
#621   We shall see. I have my alerts set. JohnCM 04/21/20 01:50:04 PM
#620   ProShares Announces ETF Share Splits JohnCM 04/21/20 01:47:49 PM
#619   I believe that one will give you the maent 04/21/20 12:40:51 PM
#618   Good. One of three tickers I may use. JohnCM 04/21/20 10:44:43 AM
#617   That was the play. JohnCM 04/21/20 10:38:25 AM
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