Be careful of ETFs - MoneyWeek Videos
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- เผยแพร่เมื่อ 29 พ.ค. 2024
- Exchange traded funds (ETFs) can be a great way to invest in the stock market or commodities. They're cheap, simple and easily traded.
However, a fair number of ETFs are riskier than people realise. If you're not up to speed on the different types of ETF, you could end up losing money unexpectedly.
So in this video, we're going to explain how ETFs work and highlight the types of ETF that are especially risky.
Thank you for the video! I read posts and watched several videos looking to answer "What is an ETF? What is inside an EFT?" and all the content I found didn't really answer it. Mostly, it exposed the bright side of the ETF.
I am very glad I found this video, it clarifies my questions. I appreciate to understand what I am investing in.
Beware thinly traded ETFs
Not enough sellers when you want to buy and not enough buyers when you want to sell
Can you give some?
Good job Moneyweek team. Informative, precise and easily understood material.
A superb introduction, excellently explained. Thank you.
Thank you, so much for this. Really well explained!!
Excellent presentation, thank you sir!
Really very good information about ETF.
The initial bullish wave will hit the resistance and bounces back straight off it, finding support
after a market retracement as a day trader. A double top pattern is a classic sign of bullish exhaustion too. Candlesticks generate signals of the market is about to tip over. The containment line for the double top candlestick is called the ‘neckline’, where you profit in measures in low risk factor. And this is where the market found support after the first peak. you can understand the market in a simple way with good trade plan. I use blended model as my trading plan on every trade and i always take profit.
thank you so much for sharing this useful data! Greatly appreciated.
Thanks a lot for that video. It really cleared things up for me.
Main takeaway: "steer clear of corn ETFs".
Thanks a lot for the info :)
And subscribed
Thank you for the clear explanation! I wish you would give some examples for beginners.
So what is the difference between myself buying an index via broker, or me buying etf for that specific index? Thanks!!
Thanks even as a foreigner easy to understand
@Luis Cosme stfu
Great advice, thanks very much!
Very nice presentation, thank you.
great video - thanks - why anyone wants to downlike this is nuts- you explained everything perfectly
This is extremely useful! There is a new vanguard V3ee etf following the VWRA. What do you think of this
Thanks for explaining. I’ve subscribed 😎
Very clear 🤙🏼
Oh thanks for that! I was thinking to buy a leveraged ETF but since I prefer to leave it, now I'll keep my leveraged position small...
Excellent!! Thanks!!
You 'hope' they own physical gold in Switzerland :).
This.
😱
The elephant in the room spotted.
After ww2, they have quite a few
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Great video, well focused on the problems and offering a path for easy investment.
Simple enough to understand pros and cons. However, the lecture lacks any quantitative data showing how "simple", "cheap", "easy-traded", etc. Is it better than index fund? I know it only after googling it. By the way, thanks for the nice explanation.
Truly appreciate your videos.
5:48 - Funky or sexed up? Are we still talking about investing?
Th3 Lone Star 😆😆😂
What can you do with physical gold anyway? Its purchase and sale value is measured in currency.
Why is it a problem to be paid in currency?
Nice presentation
Six years later his gold ETF finally pays off!
If only he hadn't ditched it for oil...
@@bennymarshall1320 LOL!
Well Am i wrong to say that on day 2 the index fall by 5.5 (110-104.5) ? meaning the ETF fall by 5.5 x 2 =11. Computation in Day 2 for the ETF is therefore not accurate....(120-11)=109... Except if he already included the rebalancing while giving the example....
It looks from what you are saying that a -1 bearish correlation unleveraged ETF for the S&P eg (SH) would be safe to hold if the market droppes overall over months or years. It's not made perfectly clear when you said at the end its best to stay away from bear ETF's
Hi Ed, Quick Question how well do ETFs recover after a financial collapse? I wasnt trading in 2008 so i have no clue what to expect.
Most of them were created after 2008.
Great video, keep it up 👍
In light of this video, is the Vanguard S&P 500 ETF a good ETF that doesn’t utilise all the problems outlined above? It’s frustrating that the disadvantages of ETFs are very hidden and advisors won’t outright say whether the returns on a Vanguard S&P 500 ETF and Vanguard S&P 500 mutual fund are same or not.
I invest in TQQQ even though it's a synthetic, leveraged ETF. The returns are substantially better than I can get with other investments. The underlying index is diversified and itself can be expected to beat the S&P500. I don't really care that I'm not getting exactly 3x the performance of QQQ, it's still more. Yes, I lose ground when the index goes down, but I don't usually lose all of the extra gain, and the recovery is usually fairly quick.
Unless you try to sell and can’t get out.
Thank you!
There are good and bad EFT funds. It really comes down to the quality involved.
Can anyone suggest a broad commodity ETF that has less exposure to a negative carry? I'm looking for a commodity ETF to hold over the long-term (4-6 years)
whats the difference between an etf and investment trust?
Well explained, thanks
Good info. Watched at 1.25x speed.
Watched it at 8x speed
Very clear !!
3:46: A "synthetic E.T.F." does not refer to the same thing as an equity-E.T.F. that samples its index rather than replicates it exactly.
I have a Roth IRA account with Vanguard. I have been searching high and low to find out what the advantages or disadvantages of having an index vs. an ETF upon retirement. Ex. I’m going to retire in a month, how are each funds treated upon redemption. Ex. I have $500,00 and im eligible to retire. Should I have been investing in an Index or ETF? No one has explained the differences when you are ready to retire. Can you help me please?
Great video thanks
Exactly, if teachers were to conduct online teaching at home to school students, teachers need all these facilities at home. A whiteboard at a quiet private space. There shouldn't be any disturbance or background noise while they do the recording via web cam. Then, teachers can do the step by step teaching and video record it. Power point presentation is more appropariate for higher secondary, college students or working adults.
What about the counterparty risks of etfs. for example synthetic ETFs have the risk of the counterparty defaulting while physical ETFs have the risk of the counterparty defaulting when they have been lent the securities
Gold and silver ETFS (GLD & SLV) are NOT backed 100% by the metal they follow.
Every Oz of physical metal in the vault has more than 100 ETFs with a claim to it.
No problem unless prices spike very high and poeple demand delivery of the metal.
The EFT contract will be terminated and you will loose out on future metal price rises.
So Vanguard S&P 500 index fund ETF or Vanguard S&P 500 index mutual fund? Would they be expected to give the same long-term returns or is there a catch where ETF returns for the same index is lower?
They are essentially the same. One difference is that you need $3,000 up front to get into the index mutual fund, and to get into the ETF, you only need the price of one share, ~$350. Also, a mutual fund is bought at the end of the day, whereas ETFs are traded like stocks and can be bought and sold during the trading day. Some trading platforms allow you to buy fractional shares of ETFs, which is nice.
@@pnkrckmom then it sounds like an ETF is better plus no fees. Why would anyone go with a mutual fund instead then?
@@Ultra_James__T So, there are actively managed mutual funds and passively managed mutual funds. ETFs and passively managed mutual funds do have expense ratios, but they are typically far, far less than actively managed funds. Most 401ks and 403(b)s use mutual funds - active and passive. For example, my job has a 403(b) retirement plan, and fortunately I can choose Vanguard's S&P 500 index fund (not an ETF, a passively managed index), as well as small cap and mid cap index funds. In my Roth IRA, I have mostly VTSAX, a total stock market index fund. In my taxable accounts, I use ETFs (except REITs). If you are new to investing, I highly recommend you start doing a lot of self-study. Any book by John Bogle is great. For youtubers, check out The Plain Bagel, Ben Felix, Minority Mindset, The Independent Investor, IndexInvestingShow, Heritage Wealth Planning, and Our Rich Journey. A good forum to read is The Bogleheads Forum.
@@Ultra_James__T Note that mutual funds on vanguard you can put in or take out $1, and you can do automated withdrawals and contributions. ETFs you buy and sell a share at a time and can't do automatic add or take. They are calculated and managed slightly differently, and ETFs tend to have a hair less expense ratio. Two of my mutual funds are managed to five index funds, while I have some ETF shares too.
This video is good but the title is misleading. It's not about ETFs as much as it is about Index ETFs, which as very different. Index ETFs purchase some or all securities of a specific index. The ETFs I prefer are industry or sector specific such as FIVG (5G stocks) or XSD (semiconductor stocks) which choose the top 10-15 holdings of a specific sector.
here in 2018 and this is so informative. thanks so much for sharing
what happened to tim?
One serious pitfall of investing in ETFs that use futures contracts is the negative roll yield due to a contract ladder being in contango.
brujah88 I realize this was 4 years ago, but I'm curious, how would owning an etf compare to rolling the future contracts yourself? About the same or no? I ask this because I'm looking into ETFs as a way to more precisely tune risk as I am not highly capitalized enough to straight out trade all the duties I want futures.
how do you trade an ETF? Any ETF that you trade? Where can i find a list of ETF's in Canada. What brokers are there that trade these?
Look at VFV if your in Canada , or SPY if your in the US
Hi, how could I know if an ETF is physical or synthetic?
Read the prospectus. It will tell you how the ETF actually operates. If it's buying futures and options, it will tell you, and then you will know it's a synthetic ETF. If it's buying actual shares of stocks or physical commodities, then it's physical.
What is the difference between buying gold as a commodity and buying an ETF that follows gold?
When you buy physical gold, it's in your possession. When you buy the physical ETF you don't know how many others also have a claim on it. If I understand this correctly, you should be able to request delivery of your gold if you decide not to have cash since it is a physical ETF. Then you would be able to purchase it at spot price, whereas if you went and bought it from a bullion bank, you'd have to pay the spot price plus the premium the bullion dealer charges. I should open an account and try this for myself.
Domo Thanks!
How to invest/buy in FTSE100 or Indian Index Funds like NIFTY & SUNSEX for Long Term (10-20 years)
Which platform/website/medium to use?
E.g., if I want to invest £1000/Month for next 10-20 years ,How & where to start ?
Could you please guide as I am completely new??
Is he explaining rebalancing or the compounding effect? Taking his example, if the index rose 10% the next day, the closing price would be $121. The Etf would rise 20% to $144. Your overall gain would be $44 vs. $21 or more than 2x leverage. Also, markets don't usually move 10% in a day, so his example is too exaggerated. He's certainly right that leveraged etfs don't track well over the long term, but it seems like there is another mechanism in place.
thank you
Fantastic
I also love a “sexed up ETF” 😂 but seriously - great content!
Why wouldn't you want the BEST companies in the index?
In addition, how can trading cost is low while you have to pay the broker/commission fee everytime you trade?
Kevin Kangdinata that's not always true.... Vanguard ETF's trade free if you trade them trough vanguard, same with a lot of ETF's, a lot of online broker companies give a certain amount of free trades. When you trade enough shares a few dollar charge is nothing compared to a hundred thousands 5 dollar charge is .005 percent
Take everything I say with a grain of salt I don't know much about finance. I'm an accounting major
The fee's he's speaking about are those that are built into the fund as a cost of ownership, not a cost to purchase. All funds have some sort of overhead charges built in, but compared to mutual funds or the like, passively managed ETF's have much lower annual fees due to not having to pay an "active" manager. The difference can be quite substantial and can make a real difference on returns over a long time frame.
ETFs would be particulary good for high frequency algorithmic trading...
In layman’s terms, what’s the difference between an ETF and “traditional index fund”?
I believe, an ETF can be sold throughout the day, similar to a stock. Whereas an Index can only be sold at the beginning of the day.
@@CSypheru You can't buy an index. You can buy a fund that TRACKS an index. You can't buy the S&P 500, but you can buy the Vanguard S&P 500 ETF for instance.
You can have an ETF that tracks an index, or a traditional mutual fund that tracks an index. You can't trade these traditional mutual funds intraday.
ETFs are exchange traded funds, they're mutual funds that trade like stocks. Not all are index ETFs, however all ETFs are mutual funds. Likewise, not all mutual funds are index funds.
@@alex2143 thanks!
Do ETFs pay in dividends or is any potentially tial profit made in the buying and selling of the shares?
Some of them do! It will be shown as the 'yield'. Some have high yield, some low, and some have none at all! Just do the research before buying
There are pluses and minuses to everything. But overall, ETFs are more advantageous than mutual funds.
I think video name should be corrected to " basic and type of ETF".
Is true that this days there's an "ETF bubble" lately?
It seems like ARKK is an ETF that this video didn't predict.
If ETFs is a passive investment, then what about index fund? Isn't ETFs supposed to be active because you can buy and sell the investment?? which is why it is called exchange-traded
The difference between active and passive has to do with how the fund is managed. Active would be if the fund management is constantly making changes to what is contained within the fund by either buying or selling assets in an attempt to stave off losses or improve gains.
Whereas passive would be more of a set and forget sort of structure, since the S&P or FTSE are not changing the underlying assets regularly, there's no need for a fund manager to constantly be changing what is in the fund.
ETFs can be Indexed or not, an indexed fund just indicates that it follows a specific pre-existing index. An ETF could also just follow a segment of the market, say technology, that doesn't track any specific index, but is comprised of a bunch of technology stocks that are not regularly changed, maintaining the passive strategy.
Index funds are a type of ETF, and the point is ETF just follows the market while mutual funds and hedge funds try to beat the market return on investment. This is active vs passive idea, passive is investing in everything and following the market, not trying to hit the best options available like the other types.
Good luck with that gold ETF
I made some solid money from GLD - of course it's a scam, so is everything
@@yingyang1008 why do you find it a scam?
@@animehost4151 It's paper gold, a type of ponzi scheme, one day it will go bust
@@yingyang1008 yes it can go bust.
But it's going to take some time till the investor's realized that it's a ponzi scheme.
@@animehost4151 Yeah I agree, what's important is whether you can use it successfully
I think you obviously can
My money is in Gold mines..Centamin
Sounds to me like you shouldn't spend more then a day in a leveraged ETF. I got lucky with AGQ in 2010. But if I'd known what I was doing I would have never invested in it. More then a day.
It's not designed to be held for more than a day
Lol; 2x leveraged commodity ETFs are speculation instruments, nothing to do with “investing”. There’s nothing wrong with either, but they are entirely different, serving fundamentally different purposes.
invest in vanguard etfs, low mer fees
Can an etf be bankrupted? Uwt made me broke!
What is the best ETFs company that you advised guys ?
Meki go for the more popular ones by vanguard or similar.
Just a quick note, Vanguard discourages trading leveraged and inverse ETFs.
I just can't get a handle on how ETF's are formed and distributed. If it's privately traded how is the price regulated so the "Stock" price doesn't outweigh the value of the portfolio.
blitzburns4 iIt is publicly traded. If price diverges from NAV, then market makers can redeem or by more shares. Such arbitrage tends to keep the price at the NAV.
Taking early notes from Warren as to the importance of sound asset diversification and risk management It can’t be overstated. I’ve been trying to grow my portfolio of $300K for sometime now, I would greatly appreciate any other suggestions.
Well the bigger the risk,
Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon , and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
0:28
No
I invested money in 3 different portfolios. I realized that I already lost 82$ within 16 days. is this normal?
nikita snow I think I know what the problem is. You bought ETFs which decreased in price. You should avoid that and only buy ETFs which will increase in price.
@A one legged man LOL
@A one legged man in a ass kicked contest.
If you think about it, you haven't lost or gained whatever amount of money until you cash in your shares. It's a good idea to think long term.
I only TRADE ETFs, not INVEST in them.
Same. They are excellent products for strategic investing.
monkeyboywynnsr Why?
That's the exact opposite of what they are meant for, you pillock
@@KaizenLife wtf is strategic investing? sounds like active to me
@Andrew Trapman wyf6?
do keep in mind that... if market trending sideways the leveraged will loose money also.
it is designed for ups or downs, not sideways ;)
lose
The initial bullish wave will hit the resistance and bounces back straight off it, finding support
after a market retracement as a day trader. A double top pattern is a classic sign of bullish exhaustion too. Candlesticks generate signals of the market is about to tip over. The containment line for the double top candlestick is called the ‘neckline’, where you profit in measures in low risk factor. And this is where the market found support after the first peak. you can understand the market in a simple way with good trade plan. I use blended model as my trading plan on every trade and i always take profit.
@@venivindi6238 sounds incredible
do ETFs pay dividends?
CAN KILLER yes they do
So when was the last time you saw the stock market go up 10% on one day and down 5% on another? Never. I wish with these videos they actually give you real examples of a leverage ETF over a 2 month period of time in 2019 for example. Not only that, but give us several examples over a certain period of time to be fair. A popular ETF is TQQQ (3x leveraged), please give us examples of how it "decays" over certain periods of time?
us equities down 7% then up 10% the very next day. aus equities plunged 8% at open then recovered roughly 12% on the SAME day to end up 4.4%. That week was still an 11% drop. Unprecedented. Markets are volatile.
@@nvm1636 , Never say never, I was wrong. For me to sell now I will be down 75%, so I'm going to hold. If you panic and let fear take you over, you will be down so much you'll never get it back. If you think semiconductors, 5G and all these great companies in this portfolio will disappear, then you should sell. I don't believe that. It may take a while, but it will do well longer term. I wish Everyone health and future financial success. Also, please stop buying so much toilet paper. As Trump said today, RELAX.
@@erichvonmolder9310
It is only an invest if you can make a financial analysis on it. If you are putting money in because you think you will get a return as it maybe the next big thing then that is not investing and is speculation.
It's John Oliver's dad!
I LOVE YOU GUYS
4:40
Don't listen to this guy if you want to make money. Anything other than an extreme low cost all market ETF is an accident waiting to happen. Buy anything other than Vanguard, Black Rock or State Street and you increase your risk for no gain. Vanguard funds are legally owned by their investors. If Vanguard go out of business the investors own their funds and can appoint another trustee. Nothing beats that.
@ 5:22 Did he just say por...
curious as to weather there are any publically traded porn companies now
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He has helped me with my stock selection and even trading, I am glad he gave me his full assistance and i could make a huge profit so far within 2 weeks.
Really, that Huge ? Heard much about the losses than wins from stock trading for a long time, I'm not quite sure I'll want to go into it yet,
I`m on my way to millions with Ben foster ,he is the finest trader I have ever done business with for now
This man is so underrated he makes me $14,000 after two weeks , with an investment of $3500. i still don’t know why he is underrated
this man; funky and sexed up
Thanks man. I mainly invest in real estate. See my TH-cam real estate channel. I’m a small developer and multifamily investor
What ETFs do you invest in China with. I just want to invest in the broad China market and not be too risky. Maybe 5% of my portfolio?
1
Watching this in 2020, after what the Fed did during the coronavirus, ETFs are the future gold 🤣
Jeez,.. backwardation = forward price below spot & contango forward price above spot. Is that hard to understand? We aren’t idiots 🤪