The exchange traded fund either exchange traded funds are funds that are traded on the secondary stock market. Although only a few of the thousands that exist can be traded in our country, these assets are enjoying great popularity because they can generate large profits to its investors.
What does ETF mean?
stock market listing, corresponding to exchange-traded fund or in Spanish exchange traded fund, it’s a Investment fund by invest in a compound of assets, very similar to a common investment fund.
The main difference of a exchange traded fund and a Common Investment Fund is that the exchange traded fund they can be traded quickly just like other assets like stocks or bonds. Generally, ETF portfolio manager create funds that seek to replicate some index such as the index Nasdaq 500 or the S&P 500.
ETFs that mimic the behavior of indices like the S&P 500 are the most popular
Of ETF Types
We can distinguish of ETF types. On the one hand, those of active management and, on the other, those of passive management.
In the case of those of active Management, the portfolio manager assembles the portfolio of a certain sector based on its own criteria and without the need to replicate a movement of a certain index.
Instead, those of passive Management, the managers of the fund compose their portfolio in such a way as to faithfully replicate the movements of a given index. In line with this, we spoke with Mariano Monferini, public accountant and self-employed producer agent, about the importance of these assets.
In the case of actively managed ETFs, a portfolio manager is in charge of putting together the investment portfolio of said ETF.
“The exchange traded fund They are exchange-traded funds. The main advantage they have is that it allows us to diversify, even if our investment is small. In addition, they are very useful to gain exposure to a certain sector, region, etc.”, explains Mariano Monferinipublic accountant and independent producer agent.
What are the most profitable ETFs?
Currently, the variety of ETFs that exist in the world are enormous. Also, each exchange traded fund offers a potential return different, especially since some are geared towards conservative profiles (which translates into less risk), while others take more risk looking for a higher gain.
Within the world of ETFs, some are aimed at conservative profiles while others are aimed at investors with a higher tolerance for risk.
“For a conservative investor, I consider VGSH. VGSH is an ETF that invests in short US bonds and treasury notescount with one expected return of 2.9%. On the other hand, with a volatility and rather higher rate, we have the HYG of black rock that invests in US corporate debt high performance (i.e. lower quality), with a approximate yield of 7%Monferini explains.
However, not everything is positive, since there are some aspects to take into account when invest in this type of assets, Like the taxes to be paid abroad.
In the case of ETFs in the United States, said country withholds 30% as taxes to those who are not taxpayers
“Some of the aspects to take into account is that when these ETFs pay dividends (in the case of those incorporated in the United States), the US government retains 30% of these as tax payment to people who are not taxpayers of that country“, he argument.
What are Argentina ETFs?
Although, as we mentioned throughout this note, there are a large number of ETFs, in Argentina we can only access a handful of them. Namely, from Argentina, we can only access the ETFs that comes through the cedars
“In Argentina we have access to Spy, QQQ, XLF, XLW, EEM, XLE, ARKK, EWZ, DIA and IWM. For him local investor these ETFs in addition to the advantage mentioned above have those of the certificates of Argentine deposit (Cedears), that is to say, they cover us of the currency riskMonferini argues.
ETFs cover us from the Argentine exchange risk
On the other hand, the expert emphasizes that, for a moderate profile, the TO SPY that tries to replicate the S&P 500 is an excellent option.
“For a moderate profile, the SPY that tries to replicate the S&P 500 is a good option. Then, with a little more volatility, the QQQ that replicates the Nasdaq. Finally, the EEZ, that tries to follow the Brazilian economy, can be a good option looking more at the medium/long term“, says the expert.
What is the most popular ETF?
Currently, there are many exchange traded fund in the world, although, as we already mentioned, only a few can be accessed in Argentina. Without a doubt, the ETFs what replicate indices they are the most popular.
However, there are some exchange traded fund what are popular for certain profilessuch as the case of ARKK ETF who enjoys great popularity in investors looking take large doses of risk in exchange for getting great returns.
“The ARKK ETF, which has been having a really bad year, specifically -60%, invests in innovation. It really is a Very volatile ETF and many of the companies in which it invests are questionable, but for those who like risk, it can be a good option,” says Monferini.
Finally there are the ETFs that are very popular, but in niche Investors, that is, in people who invest in certain markets.
“Some of ETFs for private investors that must analyze the risk they incur, may be XBI Biotechnology, HYDR Green Hydrogen, ita defense and sector aerospace, although the list is very long”, concludes the expert.
In a nutshell, ETFs are a very good option, although, like almost all assets, it has low-risk” versions by conservative profiles, others pointing to moderate investors and, finally, those aimed at investors who support high doses of risk in order to get huge returns.