ETFs have rightfully earned the approval of countless buy-and-hold investors as these financial vehicles have proven to be cost-efficient portfolio building blocks. With over 1,400 exchange traded products (ETPs) on the market, it’s also no surprise that more tactical investors and savvy traders have also embraced these instruments for their ease-of-use, transparency and unparalleled liquidity. As such, ETFs can do a lot more than offer diversified exposure; these funds can be effective in executing both simple and more sophisticated hedging strategies, helping to improve your portfolio’s risk-adjusted returns [see 101 ETF Lessons Every Financial Advisor Should Learn]. ETF Hedging Advantages Hedging is using one investment to help offset the risk of another. This strategy, when done properly, can greatly reduce the susceptibility to market fluctuations and adverse price moves. In order for a hedge to work, the “hedged” assets should move in different directions—when one falls the other rises—netting out [...] Click here to read the original article on ETFdb.com. Related Posts: Free ETF Trading: Comparing All The Options 101 ETF Lessons Every Financial Advisor Should Learn Alternatives To The 20 Most Popular ETFs ETFs: The $10 Billion Club GDX vs. GDXJ: A Better Way To Play Gold?
ETFs have rightfully earned the approval of countless buy-and-hold investors as these financial vehicles have proven to be cost-efficient portfolio building blocks. With over 1,400 exchange traded products (ETPs) on the market, it’s also no surprise that more tactical investors and savvy traders have also embraced these instruments for their ease-of-use, transparency and unparalleled liquidity. As such, ETFs can do a lot more than offer diversified exposure; these funds can be effective in executing both simple and more sophisticated hedging strategies, helping to improve your portfolio’s risk-adjusted returns [see 101 ETF Lessons Every Financial Advisor Should Learn]. ETF Hedging Advantages Hedging is using one investment to help offset the risk of another. This strategy, when done properly, can greatly reduce the susceptibility to market fluctuations and adverse price moves. In order for a hedge to work, the “hedged” assets should move in different directions—when one falls the other rises—netting out [...]
Click here to read the original article on ETFdb.com.
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