Learn about ETF's

WHY ETFs?

ETFs are the best investment idea to come along in the last generation. The origins of ETFs' can be found in academic studies, which support the idea that all managed mutual funds, over time, will under-perform an indexed fund representing a broad cross-section of the market. The fact that some funds may have outperformed the market average for ten or twenty years does not necessarily attest to their superior performance. With some 13,000 funds in existence, the law of averages combined with luck can easily account for a handful of funds having a string of superior results. As Nassim Taleb points out in his book "Fooled By Randomness - The Hidden Role of Chance in Life and in the Markets", never under estimate the importance of luck.

ETFs are designed to give you market average results for a particular market or sector, nothing more and nothing less. They buy a basket of securities representing a cross-section of a particular market. Most important, they make very few changes to that basket of securities. The fund sponsor creates new fund shares as demand requires. Sellers can either sell their shares on the open market, or turn them in to the fund sponsor who will give him the equivalent in underlying securities. This feature means that, unlike closed end funds, the fund will never vary much from the underlying net asset value of its holdings. Shares within the basket are only bought and sold if a new security is added or removed from the index being tracked or if a merger/acquisition makes a share disappear. Over time, such an ETF will outperform all but the most fortunate conventional/open-end funds

Each month our newsletter will provide you with recommendations of funds to buy by sector, for the US market and for the international market. We'll also tell you what new products are coming out and what's happening in markets around the world. We will advise you about strategies that can be used to hedge your risk or enhance your returns. We feature model portfolios of ETFs and CEFs for conservative, medium and aggressive investors in order to provide a mixture of our past recommendations which suits the various investment styles. Finally, fees do count and we'll compare them for you. Looking forward, ETFs are early in an evolutionary cycle where more and more intellectual input will be provided. We'll keep you up to date on these changes and what they can mean for you.

If ETFs are of interest to you, I believe our monthly newsletter while help you in making better choices. As with all our publications, you can cancel anytime and receive a pro-rated refund. The annual subscription rate is $195 for 12 issues. You can subscribe by phone (800-472-2680) or by clicking here.

Richard Lehmann
Publisher
ISA - ETF Investor Newsletter