Questions tagged [etf]

To be used for any questions relating to Exchange Traded Funds.

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72 votes
6 answers
9k views

At what point do index funds become unreliable?

Passively investing in exchange-traded funds that track some broad index is often recommended for private investors that don't have the time or expertise for active investment. In particular, index ...
henning's user avatar
  • 1,657
44 votes
8 answers
19k views

Is this projected return from Wealthify too low?

I am really new to investing and I am so confused. Books, blogs and conferences suggest that investing is the way to multiply wealth. I do not have enough start up money to play with mutual funds, ...
kang's user avatar
  • 551
38 votes
11 answers
12k views

Why do people claim that it's hard to outperform the S&P 500? It has only increased in value by ~1.5x in the past 5 years

Whereas companies like Google, Facebook, Netflix, Amazon, Apple have all increased anywhere from 3x-6x in value in the past 5 years. If you just stuck with those companies, you would have easily ...
Eric Gumba's user avatar
35 votes
12 answers
17k views

"Don't invest now because the market is high"

I have heard many people in my life say things like The market is low so it's a good time to invest or The market is high so don't invest It makes me wonder if mean-reversion is actually a ...
Oliver Angelil's user avatar
35 votes
2 answers
3k views

What are the important differences between mutual funds and Exchange Traded Funds (ETFs)?

I've been considering, but haven't committed myself yet to investing in Exchange Traded Funds (ETFs), but have to admit that I don't yet fully understand the use-case for them. What factors are ...
JohnFx's user avatar
  • 53k
31 votes
8 answers
12k views

Why would anyone ever invest in a cash-only etf?

I understand the benefits (and risks) of ETFs, and I also understand the benefits of a term deposit in a bank. I have seen that there are ETFs that essentially keep the investment in cash, that is, ...
Juan Antonio Gomez Moriano's user avatar
28 votes
5 answers
7k views

How much money do I need to retire?

Assume that I need $15,000 (USD) per year to cover all my costs including health insurance. How much money do I need to retire? The naive approach would be something like this: An ETF gives, on ...
simplemind's user avatar
28 votes
5 answers
39k views

Buying an US ETF from Europe using Interactive Brokers

I am trying to buy an ETF using my account in Interactive Brokers. I am surprised to see that it is not possible. I am living in Europe and trying to buy an ETF in US dollars. Their response to ...
bp2010's user avatar
  • 462
27 votes
7 answers
4k views

Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc

The dominant advice on this site (including that which I give to novices) regarding investing is to only invest in fund vehicles (mutual funds, ETFs, etc), rather than in individual stocks. Why is ...
warren's user avatar
  • 3,229
26 votes
4 answers
7k views

What is the difference between these two S&P 500 ETF?

I wanted to invest in the Vanguard S&P 500 ETF which has the ISIN code US9229083632 However I just discovered it is not available in my country. As an alternative I am considering investing in ...
Octoplus's user avatar
  • 719
25 votes
5 answers
40k views

Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other?

These tickers (SPY, SPX, /ES) are all based off the S&P 500 yet the relative lows and highs diverge. Can someone provide a basic explanation what causes this to happen? I feel like it may stem ...
Joey's user avatar
  • 361
25 votes
5 answers
7k views

Why are daily rebalanced inverse/leveraged ETFs bad for long term investing?

I was reading this article about S&P 500 short ETFs: https://www.zacks.com/stock/news/176217/4-ways-to-short-the-sampp-500-with-etfs and I was confused when it said: "investors should note that ...
glen4096's user avatar
  • 353
25 votes
4 answers
8k views

Why would a long-term investor ever chose a Mutual Fund over an ETF?

(I read this previous question but would like to differentiate my question by having it focus exclusively on long term, buy and hold investing). From my understanding, it is conventional wisdom that ...
Matthew Moisen's user avatar
24 votes
3 answers
2k views

What differentiates index funds and ETFs?

Many companies offer index funds and ETFs. If two funds or ETFs track the same fund, what differentiates the two? Is it common for one index fund to outperform another? How can this happen if the ...
Ryan Michela's user avatar
  • 1,299
22 votes
9 answers
7k views

Investing in a leveraged index ETF for retirement. Risky?

Let's say someone has a few thousand saved in an IRA. Right now I have it sitting in Treasurys earning around 3%. Over the past 50 years the S&P has averaged around 11% per year in total returns. ...
user avatar
21 votes
2 answers
3k views

How to know if two ETFs are 'substantially identical' according to wash sale rules?

Wash sale rules are pretty straight forward when you're trading stocks directly. However, how are these rules applied to ETFs? Right now I own shares of CMF and want to do some tax-harvesting on some ...
user avatar
20 votes
2 answers
7k views

Why do ETFs that replicate the S&P 500 vary significantly in price?

From Wikipedia: Exchange-traded funds (ETFs) that replicate the performance of the index are issued by The Vanguard Group (NYSE Arca: VOO), iShares (NYSE Arca: IVV), and State Street Corporation (...
Paul Razvan Berg's user avatar
19 votes
1 answer
614 views

What's an Exchange-Traded Fund (ETF)?

I've been hearing a lot about exchange-traded funds, or ETFs. What exactly are they, and how would I use them?
user avatar
18 votes
3 answers
2k views

Regular contribution threshold for ETF vs Index Mutual Fund?

I've seen enough info out there comparing lump-sum investments into ETFs vs mutual funds with respect to broker commissions in the case of ETFs, and the discrepancy between MERs between the two. In ...
fideli's user avatar
  • 2,283
18 votes
3 answers
3k views

Do ETFs move on their own? Or only on aggregate from the individual holdings?

Of course every security moves due to supply/demand from sellers and buyers. More people wanting to buy drives price up, etc... How does this work with ETFs? If I have ETF X composed of companies A,B, ...
Runeaway3's user avatar
  • 2,898
17 votes
5 answers
8k views

Is my investment safe if the broker/bank I'm using goes into insolvency?

I'm using Scalable Capital as my broker. Once I buy ETFs through them, if Scalable Capital (or the bank they are partnered with) goes into insolvency, is my investment safe? I'm wondering if I should ...
MarkJeglic's user avatar
16 votes
9 answers
9k views

Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

With the recent economic struggles due to the Covid-19 pandemic the stock market seems to be even more interesting for personal investments. Taking out a loan might be one of the ways to gather or ...
pat3d3r's user avatar
  • 263
16 votes
3 answers
12k views

Is buying an index ETF which contains my company insider trading?

I work for company C and in my contract I have information that I can't buy any company stocks, because it will be insider trading. However, there is an ETF which tracks an index 1:1 to which my ...
Andrew Sasha's user avatar
16 votes
2 answers
7k views

Is it insider trading when I already own stock in an ETF and then the ETF adds the company I work for?

Let's say I own shares in the MSCI World ETF. Company X, where I am an employee, is currently not part of it. What happens when in ie a year Company X gets added to the ETF - Is my owning stock in it ...
MarkJeglic's user avatar
16 votes
5 answers
4k views

Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY?

Edit: I think it would be beneficial for any answers to include whether the answerer uses a diversified portfolio or not in their own finances, and whether they have any affiliation with Betterment or ...
Andrew Roth's user avatar
16 votes
9 answers
3k views

Are ETF trackers fundamentally better than individual stocks?

My situation: I am mostly interested in long-term dividend-paying investments. My philosophy is "only sell if the company becomes fundamentally worse", so I only pick stocks of companies I feel ...
user avatar
16 votes
7 answers
3k views

How can so many ETFs tracking the same index coexist?

I understand that different ETFs may cost different amounts of money per share, as you are buying a proportional amount of each company on the index, but why can two ETFs that cost roughly the same ...
DividedByZero's user avatar
15 votes
2 answers
4k views

Empirical evidence on active vs passive investing

Many people believe that passive investment (say buying into an ETF) typically outperforms actively managed funds because the latter induce more fees. Are there any (solid) empirical studies ...
Peter's user avatar
  • 269
15 votes
8 answers
2k views

No transaction fee ETF trades - what's the catch?

I just noticed TD Ameritrade has program where you can trade from a list of ETFs with zero fees. Sounds like it could save me a bit of money, but my cynical side wonders how they make money off such ...
bstpierre's user avatar
  • 10k
14 votes
3 answers
2k views

If a mutual fund sell shares for a gain, do investors need to pay capital gains tax twice?

In here it is stated that An investor holding mutual fund shares in a taxable account may owe tax on any net capital gains realized from the sale of his fund shares during the calendar year. In ...
Our's user avatar
  • 373
13 votes
2 answers
2k views

Why is the expense ratio of an index fund sometimes higher than its equivalent ETF?

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)'s expense ratio is 0.14% whereas VTI, its equivalent ETF, has an expense ratio of 0.03%. Why is the expense ratio of an index fund ...
Franck Dernoncourt's user avatar
13 votes
1 answer
717 views

For higher returns, put money in fewer or more ETFs? w/rebalancing in the equation

I'm evaluating my long-term investing strategy. I am somewhat aggressive and want to stick with ETFs. Scenario A 60% Vanguard S&P 500 Index ETF (VOO) 40% Vanguard FTSE All-World Ex-U.S. ETF (VEU)...
Lokesh Dhakar's user avatar
12 votes
2 answers
6k views

Why there is difference between performance of Vanguard S&P500 (VUSA) and S&P500 index

I have been recently reviewing my Vanguard S&P500 (VUSA) performance and I have noticed that it does not correlate with the performance of the same ETF on their website. Inside Vangurad ...
MMT's user avatar
  • 681
12 votes
6 answers
10k views

Should I continue to invest in an S&P 500 index fund?

I am saving to buy a house in 5-8 years. This year I invested $40,000 in a prominent ETF which tracks with the S&P 500. So far, I've lost $3,250, that is the stocks are now worth $36,750. I save $...
InvestingToBuyAHouse's user avatar
12 votes
3 answers
972 views

ETF vs Mutual Fund: How to decide which to use for investing in a popular index?

How do you decide between investing in an ETF, vs. in a mutual fund, for the popular stock indexes? Trading costs, tax efficiency, capital gains?
rjdevereux's user avatar
12 votes
3 answers
4k views

Couch Potato Portfolio for Europeans?

I recently came across the Couch Potato Portfolio concept and was happy to find an investment strategy that made sense to me. Its origin seems to be the Canadian version, and it has been translated ...
Thomas Vander Stichele's user avatar
12 votes
1 answer
8k views

How does it work when the same ETF is listed on several stock exchanges?

I'm trying to understand how do ETFs listed in several exchanges work. Take VUSA, for example. It's listed in London, Zürich and Amsterdam. Same ISIN, so I assume it's exactly the same thing. If I ...
ggambetta's user avatar
  • 593
11 votes
3 answers
6k views

Will Humbled Trader sessions be profitable?

I am tempted to buy Humbled Trader "premarket daily trading plan and discussion" subscription of Humbled Trader. Question: How profitable is it likely to be, based on the following facts? ...
10101010's user avatar
  • 241
11 votes
2 answers
3k views

Why is an ETF, which is tracking foreign equities, ticking in my local time zone?

I have recently bought the N100 ETF, which tracks the Nasdaq 100. This is an Indian ETF. So, if it is tracking the Nasdaq 100, then why and how is it ticking in my (Indian) timezone?
Dawny33's user avatar
  • 245
11 votes
2 answers
1k views

What are the "capital gains" my ETF is distributing to me alongside its dividends?

Today I noticed several ETFs I own, including SLYG, opened at a significantly lower value than they closed at yesterday (SLYG was $7.975 lower to be exact). Apparently yesterday a dividend was ...
partyphysics's user avatar
11 votes
3 answers
4k views

What happens to investors' money in SPY ETF if State Street becomes bankrupt?

SPY is one of the most popular ETF tracking S&P500 index. If the ETF issuer State Street Global Advisors becomes bankrupt in a black swan event, what happens to investors' money? Is the money 100% ...
curious's user avatar
  • 2,177
11 votes
4 answers
1k views

What to do with small dividends in brokerage account?

I just got paid some dividends from an ETF that I own. It is only $4, which is sitting as cash in my brokerage account. I'm aware that this is a very tiny amount of money in the grand scheme of things,...
Mike's user avatar
  • 926
11 votes
1 answer
6k views

How to pay taxes for ETFs in Germany?

When I invest in ETFs and I generate profit, do I have to pay taxes for the distribution or the appreciation of value of my ETF positions? If yes, how to pay these taxes and where? Is this ...
Kutsubato's user avatar
  • 149
11 votes
2 answers
1k views

Assessing the value of an ETF

I recently read through Graham's The Intelligent Investor and am looking at what index ETFs or Index Mutual Funds it makes sense for me to invest in. As I was considering this I realized that, at ...
vossad01's user avatar
  • 233
11 votes
1 answer
1k views

Is it possible to dispute a wash sale?

I recently sold some short term VTI shares at a loss (specific shares, not FIFO). With the proceeds, I purchased SCHB. My brokerage firm has adjusted my cost basis on the VTI shares due to a wash ...
InbetweenWeekends's user avatar
11 votes
1 answer
791 views

How does a synthetic ETF work?

A comment on my recent ETF-related question mentioned swap/synthetic ETFs. Most of what I can find on the web glosses over the mechanics. Can someone walk through what is happening behind the scenes? ...
bstpierre's user avatar
  • 10k
10 votes
3 answers
665 views

Should I buy individual bonds for my retirement portfolio, or stick to funds/ETFs?

To avoid the fees on bond mutual funds or exchange traded funds I have been thinking of buying actual bonds inside of my retirement portfolio. Does that make sense or are there drawbacks to consider?
user avatar
10 votes
4 answers
1k views

What low-fee & liquid exchange-traded index funds / ETFs should I consider holding in a retirement portfolio?

I'm still (one year later) going through an exercise to restructure my retirement portfolio. To date, I've been using a mix of exchange-traded index funds. Some trade on the TSX, and others trade in ...
10 votes
4 answers
3k views

Ways to get individual securities from ETF's

Is there a easy way to automatically (ie. through an API or something, not through just reading a prospectus) get information about an ETF's underlying securities? I'd like to write an application ...
nobody's user avatar
  • 451
10 votes
4 answers
6k views

Understanding downside of triple-leveraged ETF

What happens to the price of the triple-leveraged ETF if the S&P 500 loses more than one-third of its value (i.e., the return is below -33 1/3%)? Does it mean the value is equal to zero?
newbie's user avatar
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