ETF Investment Strategy
How to use the ETF investment vehicle to achieve the established investment goal?
1) long-term investment Because the risk of dispersion of ETF is good, transparent, subject to the manager little impact on subjective factors, it can expect strong, investors have more adequate information. Overseas experience has shown that in mature markets, active management of index funds to keep fighting the probability is very low, investment in the longer, the probability of fund managers beat the index is smaller; because of the low-cost index funds, long-term investment because of significant effects of compound interest increase in the relative income level of index funds. From the long-term investments, wealth preservation and appreciation of the point of view, investment ETF is a better choice. Investors can use to buy and hold strategy of low share index of the long-term growth of capital appreciation.
2) Short-term investments
For those who want to quickly access the whole market or market-specific part of the opportunity to capture some short-term investors, ETF is an ideal tool. This is because the ETF in the trading system and the stocks and bonds, can be bought to sell at break-neck speed in order to respond to changes in the market, although each transaction has a cost, but the transaction rate is relatively low. Investors can trade through active ETF, for index day fluctuations in short-term fluctuations (more than one day) to bring the band returns.
The specific method is:
(1) day fluctuations in operation: a Market (ETF share of the purchase, redemption), the secondary market (ETF share transactions) with the operation, can be recycled many times, investors do not take up a lot of money in the case of profit, as if " 42 "dial" daughter, "and raise efficiency in the use of funds.
(2) short-term (more than one day) fluctuations in operation: similar to stock trading, short-term bullish, buying ETF, bearish sell ETF, to make the difference.
3) the timing ETF is tracking its underlying index portfolio consisting of stocks, so changes in the ETF is equivalent to increase or decrease in the stock position. For Quotes change requires large-scale changes in the stock position of the investors, and more than directly to changes in the ETF shares to avoid the trouble of delivery to reduce the impact of stock prices quickly out of the market. ETF arbitrage mechanism of special help to improve liquidity and reduce the impact of large transaction costs. Therefore, ETF investors can be highly effective timing tool.
4) wheeled investment ETF investors can actively adjust the portfolio of ETF portfolio by updating the weight, position, and buy to sell on behalf of different styles, different sections of the ETF, to build a variety of market exposure in order to achieve a variety of investment strategies. In portfolio management, you can use ETF to diversify the international (for example, be introduced in future cross-border ETF), the domestic, industry, style, and market exposure, investors prefer to build a portfolio. For example, when investors are bullish on investment opportunities in a given country, you can buy the State through the ETF rather than directly investing in foreign stocks, foreign stock market exposure to achieve; when investors prefer a certain industry or a particular section, they can be investment in the corresponding sector ETF. So, to meet specific investment preferences, it is also a certain degree of diversification of risk.
5) carry trade When the secondary market trading price of ETF shares and the net value of deviation from the fund, that is there discount / premium, investors can be in the primary market, secondary market, and arbitrage between the spot market to obtain risk-free returns. A single trading day, investors can operate on many occasions. In the premise of risk aversion, raising the profitability of the constituent stocks ETF positions, increase the efficiency of fund use. The specific method is:
(1) When the ETF market price is less than 2 net value of fund shares, ETF shares in the secondary market to buy and make redemption, and then received a combination of the securities redeemed immediately sold;
(2) When the secondary market price of ETF shares is greater than the fund net buying in the secondary market portfolio and the purchase into the ETF shares, and then immediately sell the purchase of ETF shares.
6) asset allocation The use of ETF portfolio allocation to achieve the core / satellite strategy. Core / satellite strategy is an important asset allocation strategy, that is in accordance with laws of the solar system, "one center, multiple growing points" will be the portfolio's assets are divided into two categories separately configured, in which the core asset tracking to copy the selected market index indexation investment in order to obtain a particular market, the average earnings; other assets, use of initiative and investment strategies in order to capture the market a wide range of investment opportunities. As the ETF has traded convenience, therefore, through the core / satellite asset allocation method, investors can always re-deployment of assets, without the need for multi-stock delivery. Blue-chip index tracking ETF is usually as a core asset, in order to ensure that the core investment component does not lag behind the overall market; while tracking the industry, style, regional and other index ETF usually presented as complementary assets of institutional investors, or holdings of a relatively optimistic about the asset class, or higher levels of risk-return asset classes, such as energy stocks, growth stocks or funds. In addition, investors can also use a proactive strategy combination of the core structure in order to avoid missing other investment opportunities, can be various types of ETF as a satellite strategy.
7) Cash management
As the ETF liquidity and strong capital settlement, high efficiency, risk diversification, therefore, the use of ETF portfolio to achieve cash management, you can replace the combination of cash reserves to avoid the market soaring in Ta Kong. Open-end fund managers in the investment process often encounter such a dilemma, that is, the cash in the asset portfolio unforeseen circumstances, it is necessary to retain a certain percentage of cash to prepare for the need of redemption (which generally represents a portfolio the total value of 5%), but also to avoid the formation of the impact of cash drag on portfolio returns. If you can invest in ETF, then this problem will be solved. Funds can be combined idle cash to buy ETF, redemption in the face of much-needed cash, you can sell the ETF in the market, raise the necessary redemption funds, to avoid direct basis for the stock sell-off portfolio. The use of ETF portfolio management of cash, will not change the portfolio's investment objectives, it would not increase the risk of portfolio trading, transaction costs and expenses.
8) the transitional period Asset Management Change in the investment manager of institutional investors, the assets can be used as a transitional period of ETF asset management form. That is even before taking office the new investment manager to put his assets into ETF, to maintain investment in value-added opportunities; selection of the new investment manager, cash ETF, or to directly to the new investment portfolio managers.
9) development of related structured derivative products As low-cost, high mobility, the relevant financial institutions can use to build ETF related financial products, such as capital preservation funds, structured products, investment-oriented life insurance policies.
