Exchange Traded Funds

ETFs represent shares of ownership in either funds or unit investment trusts (UITs) that hold portfolios of common stocks or bonds, and are designed to generally correspond to the price and yield performance of their underlying indices. They also give investors the opportunity to buy or sell an entire portfolio of stocks or bonds in a single security. In other words, they look and smell like mutual funds, but they trade like stocks.

Like stocks, ETFs can be bought and sold at any time during a regular trading day. Furthermore, they can be traded on margin, sold short, or traded at limit prices. ETFs offer a simple and convenient way to build, or hedge, a diversified portfolio.

The advantages of ETFs include:

  • Relatively low annual expenses
  • Tax efficiency
  • Buying and selling flexibility
  • All day tracking and trading opportunities
  • Diversification opportunities
  • Dividend opportunities
  • Investment strategies such as asset allocation, cash flow management, sector/country exposure, hedging and long/short positions.
  • Ease of creating targeted sector investments

As of March 1, 2004, there were only about 135 ETFs being traded. By December 31, 2006, there were more than 360. By the end of 2010, there were almost 1,000. As of August 31, 2012, there were almost 1,500. By the end of 2017, more than 5,000 ETFs were being traded worldwide, with still more being created all the time. For a more in-depth look at ETFs, we suggest that you visit sites like Morningstar or ETF Database.

If you would like to discuss how ETFs can be used as part of a dynamic sector rotation investment strategy, please give us a call at 914-481-5888, or email Greg Werlinich at We look forward to speaking with you.