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.
Showing posts with label Short-term investments. Show all posts
Showing posts with label Short-term investments. Show all posts
Thursday, October 22, 2009
Thursday, October 1, 2009
How to choose long-term investment
Long-term investments, time is not strictly defined. Investors will not sell in the short term holdings, Under normal circumstances, the holders of more than one year should be regarded as a long (line) phase investment, but there are a lot of shareholders is almost 10 years, and even a few years to hold the same stocks, which is the long-term investment. Long-term, in most cases is based on the fundamentals, or looking to buy after the big companies and then led the development of the stock prices rise. In general, a company's fundamentals are very difficult to obvious changes occur within a few months, so If the idea of getting involved in this stock, usually takes more than a year, commonly known as long-term investment!
How to choose long-term investment and short-term investments
Many investors engaged in trading when there are no investment preferences of the points, much less the style of their own expertise, whatever that means, as long as can make money on the line, which in itself shows the lack of such investors, the stock market in the "trick." More than that was profitable in the short term and, subject to cover and made it into a long line of petty profits earned by the former, the latter can not always compensate for the countless losses. Short-term and long-term are no good or bad, as long as to adapt to the line, as long as the good that is. There is risk control measures under the premise of short-term add up, in a Quotes in excess returns can be achieved. In the selection of the stock, under the premise they will obtain a very stable long-term high-yield. Some people figuratively speaking, short-term traders as an artist, because no matter Quotes Change, he (she) always need to maintain the enthusiasm for Quotes, and always in the state of tension and excitement. The long-term traders is an engineer, he (she) need to control the entire process and revision, and the need to endure a reasonable period of market adjustment and abnormal period of wide shocks, as well as the market downturn of the loneliness and solitude. Therefore, the former need is a passion, which is needed is rational. Quotes in a time of a bureau, short-term investors often the envy of long-term investors made huge gains in the face at the bottom had been bought and sold their own has now been doubled, and even several-fold the stock are often begun to regret it, or it feels as a barbarians. However, the short-term investors, how to understand the long-term investors during this period were paid and suffering. Long-term investment (1) invest in long-term investors to put up with the market fluctuations during the "elevator" and torture, to put up with the original book has been made in profits from short-term reduction in pain; (2) The long-term investors having a running process, we need to give up many other very sure of themselves as investment opportunities; had to endure the temptation of other stocks daily limit turns with the stimulation of pain. (3) long-term investors must always be concerned about both types of market information, trends, and it must not move a long time by resistance. A year or a few years only a few of the several trading opportunities, but always suffers from a variety of market noise. (4) local time, a time when other investors to enjoy the fun profitable when the long-term investors may have to undergo periodic loss of combat, this torture enough to make many long-term investment collapse, come to naught. (5) in the market frenzy of the period of extreme depression or long-term investors take a long time kept its cool and open-minded mood, as well as objective and rational thinking, and the need to stand by the established investment discipline.
How to choose long-term investment and short-term investments
Many investors engaged in trading when there are no investment preferences of the points, much less the style of their own expertise, whatever that means, as long as can make money on the line, which in itself shows the lack of such investors, the stock market in the "trick." More than that was profitable in the short term and, subject to cover and made it into a long line of petty profits earned by the former, the latter can not always compensate for the countless losses. Short-term and long-term are no good or bad, as long as to adapt to the line, as long as the good that is. There is risk control measures under the premise of short-term add up, in a Quotes in excess returns can be achieved. In the selection of the stock, under the premise they will obtain a very stable long-term high-yield. Some people figuratively speaking, short-term traders as an artist, because no matter Quotes Change, he (she) always need to maintain the enthusiasm for Quotes, and always in the state of tension and excitement. The long-term traders is an engineer, he (she) need to control the entire process and revision, and the need to endure a reasonable period of market adjustment and abnormal period of wide shocks, as well as the market downturn of the loneliness and solitude. Therefore, the former need is a passion, which is needed is rational. Quotes in a time of a bureau, short-term investors often the envy of long-term investors made huge gains in the face at the bottom had been bought and sold their own has now been doubled, and even several-fold the stock are often begun to regret it, or it feels as a barbarians. However, the short-term investors, how to understand the long-term investors during this period were paid and suffering. Long-term investment (1) invest in long-term investors to put up with the market fluctuations during the "elevator" and torture, to put up with the original book has been made in profits from short-term reduction in pain; (2) The long-term investors having a running process, we need to give up many other very sure of themselves as investment opportunities; had to endure the temptation of other stocks daily limit turns with the stimulation of pain. (3) long-term investors must always be concerned about both types of market information, trends, and it must not move a long time by resistance. A year or a few years only a few of the several trading opportunities, but always suffers from a variety of market noise. (4) local time, a time when other investors to enjoy the fun profitable when the long-term investors may have to undergo periodic loss of combat, this torture enough to make many long-term investment collapse, come to naught. (5) in the market frenzy of the period of extreme depression or long-term investors take a long time kept its cool and open-minded mood, as well as objective and rational thinking, and the need to stand by the established investment discipline.
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