Анализ ETF

Time needed: 15 minutes.

Как проанализировать ETF за 10 простых шагов

1. Underlying investing products

   The ETF must be investing in an underlying product such as stocks, bonds or commodities and more. Knowing the product means knowing how it does, or does not fit in your strategy.

2. Cost clarity

   Find the expense ratio, or ongoing cost figure (OCF). This cost is a payment to the asset manager at the end of the year. A low expense ratio is therefore good, as it means you keep more profits for yourself.

3. Level of diversification

   An ETF is generally preferred over individual stocks as it reduces risk and spreads your investment. The lower the concentration of top 10 instruments within an ETF is, the broader its funds are invested. Hence, the safer to invest in.

4. Follow the index following

   Read an ETFs description to find what index it follows and how. For example, if an ETF states it ‘Seeks to track the performance of the CRSP US Total Market Index.’, then it aims to concentrate your investment on the US market.

5. Mimicking

   After identifying the index, it’s now important to compare the performance of that index with the ETF. The closer this figure hits its counterpart, the better the investment.

6. Assess the type

   ETFs effectively have 2 types that cater to different strategies. Either an ETF is of distributing nature, in which case investors earn all dividends and interests on a period basis. Or, the ETF is of the accumulating type, where all earnings and reinvested into the ETF resulting in a compounding effect over time.

7. History

   Look into the ETF historical performance as well as overall age. A ‘young’ ETF will most likely need more attention than an established one. If you are unsure of an ETF you found, simply continue searching and odds are you will find a different one tracking the same index.

8. Financial ‘size’

   AuM, assets under management. A term that describes the ‘size’ of an ETF in this case. More AuM means a lower chance of the fund/company becoming insolvent.

9. Know about leverage (u0026 avoid it)

   Leverage is a tool used by advanced investors and/or traders who know how it can be to their benefit. In ETFs, leverage can mean a market move is doubled or tripled in the ETF. This can leave you with a 60% loss (leverage X3) on your ETF if the market had a dip of 20%.

10. Trading volume

    Popularity and liquidity can both make or break an ETF. If many people buy and sell the instrument, it’s considered more trustworthy. If the ETF holds stocks or bonds from a company that has issued many, it becomes easier and faster to buy or sell due to a higher supply.

11. Bonus: KID u0026 ESG

    Each ETF, by law, needs to have a Key Information Document (KID). Although not the most engaging documents, they hold all major facts of the ETF. Moreover, on most EFT provider website’s, you can find assessments on ESG.