“Exchange Traded Funds (ETFs) have taken hold as one of the most popular investments on the market today. Now, with global assets in ETFs estimated to hit $1 trillion by 2010, a new class of actively managed ETFs is poised to become the next big thing for your portfolio. Here’s a look at how these exciting new investments are gaining ground – and how you can get a piece of the action with an ignored small-cap fund…,” Jonas Elmerraji Reports From Penny Sleuth.
“ETFs – baskets of securities that trade on major exchanges – were introduced 15 years ago by State Street Global Advisors. The funds were originally designed to provide an easy way to invest in major indexes like the S&P 500 or Dow Jones U.S. Real Estate Index. What set this class of investments apart from the rest was the ease of investing in assets once deemed untouchable to retail investors. Today’s ETFs provide a portal to invest in everything from gold to oil to world currencies as easily as buying shares in GE or Wal-Mart,” Elmerraji Reports.
“But until recently, the major limitation of ETFs has been that the funds are relegated to tracking indexes. That all changed in March 2008 when the first actively managed ETF launched on the American Stock Exchange. Unlike traditional index funds, which basically run on autopilot, changing their holdings to match their benchmark index, actively managed ETFs are run on a daily basis by investment managers – much like active mutual funds,” Elmerraji Reports..
“And while the current financial crisis has done a good job of stymieing growth of most investment products, actively managed ETFs have been introduced at a fast pace this year. With close to a dozen actively managed ETFs on the market right now, every major ETF issuer has been scrambling to register new funds with the SEC. Over the course of the next year, there’s little question that the number of active ETFs will double. Some of the most interesting actively ETFs on the market right now include the Grail American Beacon Large Cap Value ETF (NYSE: GVT), PowerShares Active Alpha Fund (NYSE: PQZ), and the IQ Hedge Macro Tracker ETF (NYSE: MCRO),” Elmerraji Reports.
The investment (GVT) seeks long-term appreciate and current income. The fund will invest at least 80% of assets in equity securities of large market capitalization U.S. companies. These companies generally have market capitalizations similar to the market capitalizations of the companies in the Russell 1000 Index. Investments may include common stocks, preferred stocks, convertibles and ADRs.
The investment (PQZ) seeks long-term capital appreciation. The fund invests at least 95% of total assets in stocks in the Multi-Cap Universe (as defined below) selected by AER pursuant to a proprietary stock screening methodology, which utilizes fundamental and quantitative criteria.
The investment (MCRO) seeks investment results that correspond generally to the price and yield performance of the IQ Hedge Macro Index. The fund invests at least 80% of assets in its underlying index components. The underlying index components provide exposure to broad asset classes that include but are not limited to U.S. and international equities, U.S. and international government fixed-income securities, U.S. corporate credit and high yield bonds, currencies, real estate, and commodities. It may invest up to 20% of net assets in investments not included in the index.
Full Story: HERE