'How To Identify A Good ETF' by datageneralist financialplanning retirementplanning
Top 10 holdings include Apple, Microsoft, Alphabet, Amazon, etc.This information informs you that this is a diversified portfolio of U.S.-based stocks across all industries and sizes. If you want more details you could dive deeper into thethat this ETF tracks. ETFs that track an index are “passively managed” than ones that are actively managed . The active managed ones tend to change holdings more frequently and are often more expensive than the passively managed funds.
With a shareholder yield of 1.37 percent , shareholders can expect a return of this amount of money for each share.refers to buybacks, debt paydowns, and dividends, while dividend yield only refers to dividends. Value companies tend to have higher shareholder yields and return more cash back to the shareholder, while growth companies tend to reinvest their earnings back into the company.
The objective of the fund is not something to be taken lightly. Because of the popularity of ETFs, there are many available that are more complex than your traditional index fund. If a fund factsheet mentions words such as “leverage”, “covered calls”, “managed futures”, “hedge”, “options wrapper”, or other advanced financial terminology, then you should probably avoid it unless you have a solid grasp or seek a financial professional’s opinion.
There are three methods I use to understand the liquidity of an ETF: Spreads, Assets Under Management , and Volume. The bid-ask spread for a fund is the difference in the price that someone is willing to pay versus the price where someone is willing to sell . Whether the brokerage displays the bid-ask spread for a fund or not, these still exist under the hood.
Another indirect method of determining liquidity is to identify how many assets are under management for that fund or the volume for the fund. The more popular funds tend to have higher AUM’s and volume, which correlates with higher liquidity. You can often find the AUM and volume for a fund in ETF screeners .
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