How to invest in ETF and Indices

[Mystique]

Dear Seniors,

will appreciate if you can explain about ETF in layman terms.

1) How to invest in ETF?
2) What to look out for?

How do we trade Indices?
Is there some indicators or ratios that we can based on before buying?
Which are the indices that are worth looking at?

Thanks!

[dragonhart2]

hi Mystique,

on SGX, there are many ETF listed e.g STI, SSE etc...pls find out...i am not familar with these....

Alternatively, if u have CMC CFD next generation account, u can invest in most World indices....can buy AND Short as well...so this is the option i recommend.

Timing is based on MA...same as stocks.

cheers,
jason.

Dear Seniors,

will appreciate if you can explain about ETF in layman terms.

1) How to invest in ETF?
2) What to look out for?

How do we trade Indices?
Is there some indicators or ratios that we can based on before buying?
Which are the indices that are worth looking at?

Thanks!

[Mystique]

Hi Jason,

thanks for explaining.

I've read on posts on shorting. What exactly is shorting?

Thank you.

Greg

[Retropbz]

Hi Mystique,

Buying shares we call long. You will want to buy it low, sell it high to get profit. Eg. Buy at $5 then you sell at $10 so your profit = $5
Do it when market is Blooming (BULL).

Selling shares we call short. You want to sell it high then buy back low to return back the shares ( they will lent you the shares to sell and you need to buy to return )
eg. Sell at $10, then you buy back at $5 so your profit is $10 - $5 = $5 through CMC CDF you can do it.
Its just the opposite how you see from buying shares.
Do it when market is Crashing (Bear)


You can do it through CMC CDF. They do provide this service.



For the ETF = Exchange traded Fund
you can look thru from the SGX website to get more information

http://www.sgx.com/wps/portal/sgxweb/ho ... ities/etfs

Hi Jason,

thanks for explaining.

I've read on posts on shorting. What exactly is shorting?

Thank you.

Greg

[lynnboh]

take note that holding short and long positions with CFD incurs financial charges therefore cut loss is very very important when your position goes against u. another important thing is that CFD are leverage products therefore please open positions that have a size that u are comfortable with ( money u cannot afford to lose) to prevent over leveage. i typically try not to be too engrossed by the bullish or bearish hype and open more than 5 long or short positions at one time. work out your own comfortable size.

[dragonhart2]

hi Retropbz and lynn,

tks for sharing.

Short actually means, "u Sell shares that u don't have, to buy back later at a lower price" and u need to borrow the shares or it is called "scrips"...Sell high first, then buy low .....hence u need a CFD trading platform.

Yes....shorting is just opposite of buying...just reverse the technique u used to buy for shorting...e.g buy good FA stock, Short weak FA stocks.

in CMC , u can actually chose how much leverage u want....if it chose 0 leverage, u pay 100% of the value of shares u short....and u only pay commission....since u did not 'borrow" $...hence no finance charges.

cheers,
jason

take note that holding short and long positions with CFD incurs financial charges therefore cut loss is very very important when your position goes against u. another important thing is that CFD are leverage products therefore please open positions that have a size that u are comfortable with ( money u cannot afford to lose) to prevent over leveage. i typically try not to be too engrossed by the bullish or bearish hype and open more than 5 long or short positions at one time. work out your own comfortable size.

[candy_chia]

Hi Retropbz,

Thanks for sharing the SGX link which provided crystal-clear explanations of ETF as well as substantial saving of sales charges (3 -5%) compared to investment in Unit Trust.

For the ETF = Exchange traded Fund
you can look thru from the SGX website to get more information

http://www.sgx.com/wps/portal/sgxweb/ho ... ities/etfs

[candy_chia]

Some of the ETFs discussed in this forum:

1) iShares Silver Trust (SLV - largest silver ETF) - listed in US and CFDs through CMC Markets (zero leverage)

2) STI ETF - listed in SGX
- basically 2 STI ETF, one by DBS, one by Streettracks.

3) SPDR Gold Trust (GLD) - listed in SGX

4) HK 2823 (China ETF)- listed in Hong Kong

5) UETF SSE50China100@ JK8 - listed in SGX

viewtopic.php?f=14&t=2489&p=24438&hilit=etf#p24438

6) FTSE A50 China Index ETF (2823.HK)



7) SPY is an ETF that tracks S&P 500, which is the pulse of US blue-chips.
viewtopic.php?f=14&t=2045&p=24238&hilit=how+to+invest+in+etf#p24238

8) More aggressive ETF

(8.1) [b]FXE ETF to long EUR against USD
(8.2) FXF ETF to long Swiss franc against USD
(8.3) FXC ETF to long Canadian against USD
(8.4) FXY ETF to long Yen against USD
(8.5) UDN ETF to to short the US dollar Index
(8.6) TBTF ETF to short the daily performance of the Barclays Captial 20+ years US Treasury
(8.7) TBT ETF, same as s/n 7. More aggressive as the ETF double short the US Treasury.

viewtopic.php?f=15&t=2166&p=13958&hilit=how+to+invest+in+etf#p13958


Radio recording on 12 July 2012, where Dennis shared what is ETF:

7月12日2012 ETF 挂牌基金是什么？

http://www.youtube.com/watch?v=z27K6sKD ... e=youtu.be

iShares Silver Trust (SLV)
viewtopic.php?f=11&t=1407&p=19308&hilit=how+to+invest+in+etf#p19308
viewtopic.php?f=5&t=1868&p=10917&hilit=how+to+invest+in+etf#p10917

Link for 50, 100 and 200 day MA of Silver prices:
Go to this link: http://stockcharts.com/h-sc/ui?s=$SILVE ... 6842060030

Overview of iShares Silver Trust (ETF):
http://us.ishares.com/product_info/fund ... ew/SLV.htm


STI ETF:
viewtopic.php?f=14&t=2517&p=19001&hilit=how+to+invest+in+etf#p19001
viewtopic.php?f=14&t=1305&p=13731&hilit=how+to+invest+in+etf#p13731

DBS vs StreetTRACKS STI ETF
http://www.bigfatpurse.com/2009/03/dbs- ... s-sti-etf/

SPDR Gold Trust (GLD)
viewtopic.php?f=14&t=1831&p=8409&hilit=how+to+invest+in+etf#p8409



HK 2823 (China ETF):
viewtopic.php?f=14&t=1305&p=18440&hilit=how+to+invest+in+etf#p18440


UETF SSE50China100@ JK8
viewtopic.php?f=14&t=2489&p=24438&hilit=etf#p24438

FTSE A50 China Index ETF
viewtopic.php?f=14&t=2489&p=24438&hilit=FTSE+A50+China#p24438

SPY is an ETF that tracks S&P 500
viewtopic.php?f=14&t=2045&p=24238&hilit=how+to+invest+in+etf#p24238
http://finance.yahoo.com/echarts?s=SPY+ ... undefined;

[candy_chia]

STI ETF seems to be a lucrative investment with average annual return of 9.0% for past 10 years as shared by Alvin.

He suggested regular monthly investment via POEMS Share Builder Plan, see link below for details:

http://www.poems.com.sg/financialservic ... ?value=sbp


STI ETF marks 10-year anniversary and averaged 9.01% annually
http://www.bigfatpurse.com/2012/04/sti- ... -annually/

On their website, State Street Global Advisors provide an indication of the returns associated with the streetTRACKS STI ETF from the inception date of 11 April 2002 to 29 February 2012. Over this period, the Net Asset Value (NAV) of the streetTRACKS STI ETF gained 72.90%. Including the dividend distributions associated with the ETF, the NAV gain is enhanced to 135.21% over the period. Combined, the NAV and dividend distributions of this ETF generated an annualised return of 9.01% over the period.

If you have not started investing, start your monthly investment with POEMS Share Builder Plan and buy into STI ETF. No need to watch the market, just stay still and do not do anything stupid.

You will end up richer than investing in mutual fund or ILPs or any other investment scams.

[candy_chia]

Extract of the article by Alvin on his investment experience in STI ETF via POEMS Share Builder Plan:

What I must emphasized is that ordinary folks who do not know how to time the market, can invest in this way and gain very decent profits. Since it is so simple and relatively safer than many other strategies or asset classes, it is highly recommended for people who do not have the interest to follow the market but like to profit from equities.

And the management fee is only 0.3% per annum.

But I would prefer StreetTracks because it has higher liquidity than DBS. Liquidity is important when you want to sell your shares.

And I did not time the market. It was robotic, the bank just GIRO my contribution to the plan without me doing anything. Anyone can do it! If this is the worst time, my STI ETF will even perform better in better times.

http://www.bigfatpurse.com/2010/01/my-s ... me-crisis/

STI ETF seems to be a lucrative investment with average annual return of 9.0% for past 10 years as shared by Alvin.

He suggested regular monthly investment via POEMS Share Builder Plan, see link below for details:

http://www.poems.com.sg/financialservic ... ?value=sbp

[alvin]

Yes, Candy. Graduates can consider investing in STI ETF through POEMS if
1) they have small capital and do not have enough money to invest in a few stocks (using all your money on one stock is very risky!)
2) they are not confident in picking stocks like Dennis. Invest in something stable and in the mean time, learn and improve stock picking skills.
3) Diversify the risk - in case the stocks you pick fail. Don laugh, it can happen.

[wemakebread]

Just to add my 2 cts.

Based on my understanding, Index itself not tradable.
Therefore, some financial institutions have come up with ETF which tracks the underlying index as closely as possible.
Some brokerages (eg. CMC) also come up with CFD which tracks the price of underlying index.

ETF is like a fund, and some ETFs were available on public exchanges (eg. SGX).
Brokerages can choose what CFD to offer. CFD must buy & sell from the same broker, because no central exchange.
(eg. if we buy GLD from CMC, we cannot sell on City Index)

For public-listed shares on SGX, we can buy/sell on different brokers because of CDP (central depository).


For those familiar with US market, there are a few common ETF to watch
SPY S&P 500
DIA Dow Jones
GLD gold
SLV silver
USO petroleum

[candy_chia]

Alvin shared the following ETFs during the 10th Investing Mentoring session on 13 Aug.

1) iShares Gold Trust,(IAU), is recommended by Alvin as annual fee is only 0.22%, compared to 0.45% for GLD

2) STI ETF with annual fee of 0.3%

3) Vanguard World Stock Index ETF (VT) with annual fee of 0.22%



Link on Vanguard Total World Stock Index ETF (VT)
https://advisors.vanguard.com/VGApp/iip ... undId=3141

Link on iShares Gold Trust (IAU)
http://us.ishares.com/product_info/fund ... ew/IAU.htm
http://www.etftrends.com/2012/08/etf-ch ... ay-gold-4/

Hey guys, thanks for coming for the mentoring session.

Here are the slides where you can view online (friendly on ipad too)!
http://prezi.com/syy4irnldmgx/10th-masteryourfinance-mentoring-session/

Read more about Dennis's sifus:

Mozzie: http://forum.shareinvestor.com/archive/0EE7021D/0EE7038D/
Warren: http://forum.shareinvestor.com/archive/0EE7021D/0EE7074D/

Dennis himself in shareinvestor forum: http://forum.shareinvestor.com/archive/0EE6FDB8/0EE6FFA2/

Ask me if the slides are unclear or if you have other questions regarding the stuffs shared during the session.

[Albert]

in addition, taken from CMC website:

"If you owe us money, we are entitled to withdraw your minimum margin requirement and any other amounts you owe to us. However, if we were to become insolvent, that we may not be able to repay the moneys we owe you."

Which means even if you have zero leverage, CMC will still deduct a deposit from your account. This money is not recoverable if CMC become insolvent. But your "inactive" money will still be recoverable as it is held in separate account and regulated under MAS.

[candy_chia]

There might be potential upside for Gold, considering Soros fund is is accumulating gold ETF.


Soros fund exits Goldman, adds Facebook
MarketWatch, The Wall Street Journal, Aug 14, 2012

Billionaire investor George Soros's Soros Fund Management LLC exited its stakes in Goldman Sachs Group Inc. GS -0.34% and J.P. Morgan Chase & Co. JPM +0.30% , while it significantly boosted its stake in the SPDR Gold Trust GLD -0.55% , the gold exchange-traded fund, according to a regulatory filing on Tuesday.

The Soros fund didn't have stakes in J.P. Morgan and Goldman as of June 30.

The fund acquired 341,000 shares in social-networking company Facebook Inc. FB -5.65% , which has seen its share price tumble after the company's initial public offering in May.

As of June 30, the Soros fund held 884,400 shares in SPDR Gold Trust, up from 319,550 shares as of March 31.


http://www.marketwatch.com/story/soros- ... iteid=bnbh

Alvin shared the following ETFs during the 10th Investing Mentoring session on 13 Aug.

1) iShares Gold Trust,(IAU), is recommended by Alvin as annual fee is only 0.22%, compared to 0.45% for GLD

2) STI ETF with annual fee of 0.3%

3) Vanguard World Stock Index ETF (VT) with annual fee of 0.22%

Hey guys, thanks for coming for the mentoring session.

Here are the slides where you can view online (friendly on ipad too)!
http://prezi.com/syy4irnldmgx/10th-masteryourfinance-mentoring-session/