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ETFs, friend or foe?

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Exchange Traded Funds (ETFs)

Friend or foe? You decide, but there is no ignoring the fact that Exchange Traded Funds (ETFs) have become the bee’s knees when looking for investment options.

I am taking excerpts from the recent Intellidex ETF reviews on EasyEquities, which gives readers some valuable insights into their top Exchange Traded Fund picks and market reviews.

Here are some of the noteworthy excerpts from the article:

Local: “We maintain the CoreShares Scientific Beta Multifactor Index ETF as our pick for investors seeking exposure to local equities. The fund fits our mould of a good investment philosophy. Its methodology tends to favour quality stocks which are highly profitable - exactly what we think investors need under prevailing economic conditions.”

International: “We maintain our exposure to the broad-based Satrix MSCI World Equity Feeder ETF, which is dominated by US equities. We think US stocks are more resilient than other developed market equities during turbulence, given the relatively stronger US economy. We are, however, cognisant of the elevated US valuations relative to other developed markets. The Satrix MSCI World Equity Feeder ETF grew 6.1% in January. A good alternative, though, is the Ashburton Global 1200 Equity ETF (up 5.5%) but it has a higher total expense ratio. Other more focused international equity themes include property, dividend and technology funds. These are worth considering for tactical or other investor-specific reasons.”

Other (Fixed income and Cash): We maintain our choice of the Satrix ILBI ETF (+0.2%), which has the lowest expense ratio in this category. Furthermore, nominal bonds add a unique risk-return dimension that differs from inflation-linked bonds and improves overall portfolio performance. The only option for local nominal bonds is the Newfunds GOVI ETF (+1.5%)”

 

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Easy clients

The broad-based adoption of Exchange Traded Funds (ETFs) has been exceptional all over the globe and our clients are no exception. With some of these offerings available for Tax Free Savings (TFSA) and Retirement Annuity (RA) accounts, the influx in interest is set to continue.

What does EasyResearch say

The Intellidex research notes give the reader insights and perspective of the different offerings available across asset classes. We might expect the international ETF offerings to continue to be more attractive while the local economy contracts.

Conclusion

In today's hustle and bustle lifestyle, Exchange Traded Funds (ETFs) are indeed a desirable low-cost option to use when you don't have time to put in the work to analyse a market. But like everything in life, there are always two sides to every story, and ETFs are no different. Not much is ever discussed about tracking errors or even counter-party risks, so remember that a bit of diversification might not hurt. 

 

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Education

Here is an educational piece I found on George Gammon’s YouTube channel which gives a step by step explanation on how the ETF/ Index fund market works and what to be aware of, titled Michael Burry Predicts: INDEX FUNDS WILL COLLAPSE! (I Explain Why) and yes, that Michael Burry the guy who predicted the 2008 financial crises.

Source – EasyResearch, Intellidex

Take note all pricing and performance was taken from the Intellidex notes. 

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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table

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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) and GT247.com do not warrant the correctness, accuracy, timeliness, reliability or completeness of any information received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities and GT247.com (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.The value of a financial product can go down, as well as up, due to changes in the value of the underlying investments. An investor may not recoup the full amount invested. Past performance is not necessarily an indication of future performance. These products are not guaranteed. Examples and/or graphs are for illustrative purposes only.