Air 2 A Bird

It’s wild to see the hundreds of ETFs that have srung into existance the past few years. A favorite of mine is the Oil ETF, there has been plenty of movement the past few years. For every great ETFin existance however, there is another one that sucks. The worst offenders in my opinion are the leveraged inverse funds. The inverse volatility etf XIV is one that I personally lost money in despite being right. I would like to tell average investors to please steer clear of these because they are not investor friendly. Who are regulators trying to protect by not putting restrictions on some of these things. Now back to the good stuff, there really are some excellent benefits to a good ETF. In general, unless you are trading for short term gains you should avoid the leveraged ETF products, you are much better off in stock or physical commodity based ones that avoid leverage. If you look at most oil stock ETFs (XLE, XOP, OIH) and compare it to a futures based Oil ETF, over the long haul the stocks always beat the futures. Needless to say, you will want to look at for funds that focus on oil stocks to invest in this sector. As a rule, always look for ETFs that hold actual commodities (gold,silver,copper etc) or stocks of producers instead of futures contracts & you will be fine. You can’t go wrong following this same philosophy when it comes to stock market based instruments as well. It’s always best to make sure the ETF holdings match 100% with the ones found in the stock index it’s tracking, personally I avoid most of the ETNs that rely on futures for index exposure. The only futures based instrument that I really like is the Copper ETF (JJG) which has performed very well over the time it’s been around. There are many examples like this that you can find, with just a few minutes of online studying you can easily pick out the good ones. I always go look at historical charts in order to see how it’s performed relative to it’s benchmark. There’s no better way to judge a financial instrument than comparing to what it’s tracking. If it outperforms at times and under performs at time, I want to know that prior to investing. Nearly all instruments under perform indices to a small degree because of management fees and expenses. If you are a Buffet style investor you will definitely want to choose Vanguard or other ones that have the lowest fee structure. This is another reason the leveraged funds tend to lag badly as they tend to have much higher associated costs. By focusing on plain vanilla ETFs that minimize their expenses, avoid leveraging and have good past performance you can win at the investment game!