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Futures markets ETF market by D este
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Futures markets ETF market |
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Investment,Finance & Investment
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ETFs can offer an trader the opportunity to make trades in the Commodities markets with no leverage if you choose. If the investor wants to trade on margin in their Equity account, then investors have the option of using leverage. One of the drawbacks to this type of investing instead of using Futures is that the brokerage commission tends to be higher and you don't get the same dollar move in the ETFs as you would the Futures. The traders profit potential can be less because they are not using leverage and incurring larger commissions. You need to make sure you check with your broker before you start this type of trading. Since the bull market in Commodities began back in 2002, investors have seen Commodities become their own asset class. Investors are looking for hard assets to place in their portfolios to protect against inflation and diversification to add to their profits. With this diversification comes a negative correlation between Commodities and Stocks. A recent study shows that the correlation between the UBS Commodity Index and the Stock market was only .33 over the last ten years. Some of the ETFs that are related to Commodity investing. ETFs can lose as much as five to ten per year of their return value in some Futures markets because of this type of situation. This becomes more of a problem if you select an ETF that is Commodity specific GLD Gold, USO – Oil, UNG – Natural Gas, because any of these markets could be in contrast and each time the ETF has to rollover their contracts, the fund will take a profit hit.Ltd Commodities
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