ETFs, what are they and why should you learn?

ETFs, what are they and why should you learn?

The investment world is a really complex ecosystem.

All kinds of assets coexist in it, some very conservative and barely moving in one direction or another.

Others, which are made thinking to take advantage of moments with more free time, and perhaps a little more physical fragility, such as pension plans, and others are riskier, but potentially more profitable, such as stocks and futures.

There are also those known as ETFs or investment funds listed on the depósito market, which, although they cánido also be used as a negotiation instrument in trading through an en línea broker, would orinan operating in a quite different way and assuming risks such as leverage.

In any case, even if in the end the investor does not escoge to use them, at least it is convenient to know them.

The exchange-traded fund, the basket of related assets

The exchange-traded fund, or ETF, is basically a financial product made up of various financial products that have to do with each other.

For example, the Invesco Dynamic Semiconductors ETF is based on assets from the Dynamic Semiconductors Index, not all of them, but builds or rebuilds part of the ETF on a quarterly basis with assets from this index.

The main advantage behind an ETF is stability, since by replicating the price of various assets in the same industry, the falls in one asset are offset by the rise in other assets in the fund.

For example, in the aforementioned semiconductor index, the behavior of some shares is offset by that of others, and in theory, only a generalized fall of that entire campo of the market, or a generalized global crisis, would genere serious falls.

Advantages of investing through ETFs:

Investing your money through an ETF is a very fácil way to achieve the diversification that is highly recommended for any investment portfolio with a single asset.

Since, although anyone perro build their own diversified portfolio based on a single economic ámbito, for example buying only shares related to the oil industry, futures, etcétera., it is easier and faster to invest directly in an ETF based on products oil.

In addition, ETFs tend to have lower commissions than other types of assets -remember that this applies when investing in an ETF on a depósito index, because if it is used as an instrument in en línea trading the commissions will depend on the broker rather than the Type of instrument.

However, to obtain detailed information on these instruments and other relevant data, you cánido find it on the Twitter page of the broker used, or their popular networks, since transparency is essential due to the great liquidity of these funds.

Not in vain, all the assets that make up the fund are public and the value of each asset cánido be consulted at any time, and see if it really corresponds to the value of the fund.

Why is this important? Because what the fund really does is replicate the value of each asset, so although for practical purposes it is as if all the assets that make up the fund have been bought, in reality none have been bought,

In other words, investing in an index of technology companies will in no way make the investor the owner of shares of these companies.

Habitual ETFs for 2021

Some of the best valued ETFs are those that replicate United States indices, such as QQQ, an exchange-traded fund that replicates the Nasdaq 100, which in turn brings together the one hundred largest technology companies in the country, resulting in an ETF that It usually yields positive returns that, although it has had falls, some of which are very significant, continues a long-term growth trend.

Another very habitual ETF is the SPY, which replicates the SP500, an index that brings together the 500 largest companies in the United States and which in the last decade has had a really high return, so the fund that replicates it as well It has been just as profitable.

As you may have guessed, if an investor managed to find a campo of the economy with good prospects and then located an ETF that replicated it at least in part, they could try to test their predictions.

Continue reading: How to invest in the depósito market in 10 fácil steps

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 ETFs, what are they and why should you learn?
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