Exchange-traded funds have been all the rage in recent years – they are easy to buy, easy to sell, and often have lower expense ratios than index mutual funds. But the Casey Research team dug deep into the complex world of ETFs and found that in many cases, their names can be utterly deceptive.
Here are a few excerpts of our revealing special report, The Top Ten Misleading ETFs.
Market Vectors Junior Gold Miners (GDXJ) – This ETF sure has a funny definition of a junior mining company. In my opinion, a junior miner is a small, speculative company just getting off the ground. Our publication, Casey International Speculator, specializes in this particular kind of company. If I had to put a number on the market cap, I'd say that junior miners fall under the $500 million mark. If you really want to push the definition to its limits, maybe a market-cap ceiling of $1 billion could still qualify for junior status.
Regardless of the exact line of demarcation, most of us can agree that "junior" means "small." Furthermore, most investors can agree that market caps over a billion dollars are anything but small. A billion isn't a major, but it's clearly in mid-tier territory. That said, the Junior Gold Miners ETF's top 10 holdings are all over a billion dollar or more. The top holding, with 5.23% of assets, even has a market cap of $2.4 billion – that's not exactly a junior, to say the least, and neither are the other companies on the list: Continue reading "ETFs: Do You Really Know What You’re Buying?"→
On Friday, Adam is going to go into detail about this hypothetical portfolio and it's conservative strategy. This set-up is "perfect" for those of us who don't want to look at our brokerage accounts every day.
The "Perfect Portfolio" covers 4 ETF's and Adam will look at each and also cover the strategy used to trade them.
The month of November proved to be the perfect month for the Perfect Portfolio.
Out of the four markets that we track in the Perfect Portfolio, we’ve made money in three of them. To put it another way, the Perfect Portfolio was 75% correct. The biggest winner was our GLD position that tracks gold which gained 12.77% for the month. The next winner was SPY, which tracks the S&P 500 index. It went up 6.06%. Next to that was our position in the FXE which tracks the euro. This market produced a positive gain of 1.99% from November. The only ETF that disappointed us was the crude oil market which we used the symbol USO to track. This produced a negative return of .45%.
All-in-all, the Perfect Portfolio outperformed most other diversified strategies.
In today's action we saw the dollar go down (we are long in the ETF FXE +.48), we saw crude oil jump dramatically (we are long in the ETF USO +. 94), we watched gold reverse and move higher for the day (we are long the ETF GLD +.31), and finally we saw the S&P 500 move lower (we are long in the ETF SPY -.97).
All in all, a great day for The Perfect Portfolio. If you missed our perfect portfolio video, I strongly recommend that you take a look at it. I believe no matter what economic conditions we go through in th next 36 months that this portfolio will protect and grow your capital.