Tuesday, May 31, 2011

Cruddy Information on Exchange Traded Funds

 Guide to Choosing Exchange Traded Funds 
 in Spite of Shifty Information 

The modern investor faces a raft of challenges due to the confounding nature of the information available on exchange traded funds (ETFs). One of the stumpers stems from the profusion of new-fangled vehicles for investing in a particular market. Another hurdle lies in the occasional outcrop of blighted information which may be incorrect, outdated, and/or misleading.

In the age of the Internet, one of the most popular resources for the investing public lies in the online portal maintained by Yahoo Finance. Another fount of information for the financial community is a rating agency named Morningstar, which has served for decades as a beacon on communal pools such as index funds.

Sadly, though, the stalwarts of this breed are known to serve up faulty data at times. To begin with, the information provided by two different sources may be incompatible with each other. Worse yet, the figures displayed at a single Web site are at times internally inconsistent.

For these reasons, the astute investor is obliged to mull over the data obtained before making any crucial decision. Due to the pitfalls in store, a sensible course of action is to compare a batch of figures against each other in order to assess their consistency.

Another safeguard is to give preference to elementary items of data over derived statistics. Starting from basic nubs of information, the target figures can at times be calculated manually with relative ease.

An example in this vein is to figure out the average return on investment for a particular security based on the initial and final values of the price record. Another ploy is to check a selection of numerical data against a graphic display in order to confirm that the figures appear to be compatible.

The knotty issues of this sort can be explored in depth by way of a case study involving the energy sector. The application deals with the selection of exchange traded funds focused on the market for crude oil. The standard bearer for each type of vehicle is presented, along with a review of its performance in recent years.

From a larger stance, the goal of the exercise is to uncover the problems posed by confounding data. A related task is to present a muster of guidelines for dealing with the stumbling blocks.

Read more on Cruddy Information on Exchange Traded Funds.

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Wednesday, May 4, 2011

Top ETFs for the Frontier Markets of Turkey, Thailand and South Africa

 Review of TUR, THD and EZA as 
 the Best Exchange Traded Funds 
 for Frontier Markets 
 During and After the Financial Crisis 

The top vehicles for growth include the exchange traded funds (ETFs) for the frontier markets of Thailand, Turkey and South Africa. The time frame for evaluation covers a crucial stretch of three years spanning the financial crisis of 2008 and its aftermath. In sizing up the performance of the funds, the key factors include the return on investment, the volatility of the pool, and the cost of maintenance.

As a rule, the vital features are interlinked rather than independent. As an example, a vehicle on the fast track to growth is prone to be more flighty than a sluggish one which plods along at a modest pace. Another sample lies in the cost structure: an index fund with a heavy burden of maintenance fees is prone to lag behind its rivals that have leaner structures.

In sizing up the index funds, a straightforward scheme is to begin with a list of the high flyers. Then the other factors such as risk and cost can be brought to bear on the appraisal.

For the tally at hand, the total return – consisting of the capital gain and dividend yield – covered a stretch of three years ending in March 2011. By this reckoning, the index fund for Turkey earned the gold medal.

Meanwhile, the pool for South Africa turned in a solid return coupled with a lower level of volatility. As a result, the African fund won the trophy for risk-adjusted returns.

In sizing up the efficiency of operations, the funds for Turkey and South Africa boasted a slim advantage over the pool for Thailand. On the other hand, the difference in maintenance fees was too small to have much of an impact on the rankings.

Read more on Top ETFs for the Frontier Markets of Turkey, Thailand and South Africa.

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