ETF Analysis

By: EconomyWatch   Date: 4 August 2009

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While building your ETF portfolio, you need to be able to select some of the best funds from the innumerable options available in the market. This is where you need to rely on ETF analysis to identify the ones that have bright growth prospects. An ETF analysis could involve analyzing the performance of an ETF as well as the underlying assets. It may also seek to compare the performance of the ETF with the index it is representing. ETF analysis uses technical analysis and charts.

ETF Analysis: Types
 

ETF analysis is conducted in three ways:

  • Asset class analysis: The analysis can be conducted on the asset class on which an ETF is based by using its technical charts. Every aspect of the asset class is analyzed to understand its prospects.

  • Individual analysis: An in-depth analysis is conducted on an individual ETF. All parameters including yield, characteristics, strengths and weaknesses are assessed in this analysis.

  • Comparisons: The performance of one ETF is compared to another in the same sector to analyze its relative performance.  

ETF Analysis of Some Popular ETFs 

ETF analysis of some of the most traded funds:

  • SPDR ETF: It is the largest ETF in the world by assets and tracks the S&P 500 index. SPDR ETF is versatile and capable of being a core holding in a traditional passive equity/bond portfolio. It is too broad-based and it tries to match, not beat, the performance of a popular benchmark.

  • PowerShares QQQ ETF: It tracks the NASDAQ-100 index, which includes the top 100 domestic and international non-financial companies listed on the NASDAQ stock market. QQQQ ETF, also called Cubes, works poorly in the traditional or slice and dice asset allocation portfolios as very few ETFs can complement it without overlapping.

  • iShares MSCI Emerging Markets ETF: With $23 billion in assets, this ETF is a clear indication of how investors take emerging markets seriously. MSCI Emerging Markets ETF is a convenient and easy-to-follow core holding in an advanced portfolio. However, it has a high expense ratio of 0.75%.


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Most Popular in Exchange Traded Funds

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