draw a lot of coverage in the financial press these days. The
instruments have become increasingly important, in some cases
demonstrably affecting the value of their underlying assets and
giving retail investors and professionals alike new ways to
interact with diverse and sometimes obscure market sectors.
Here are a few of the most important ETFs available for investors
interested in playing major global economic trends:
Domestic Markets -
The truth is that a lot of active funds, active investors and
investment advisers don't beat the market. So, to outperform these
players, there's a simple solution - just buy the index. The three
most popular trackers are:
- SPDR S&P 500 ETF - One of the first and longest-lasting ETFs,
these were originally called the Standard & Poor's Depositary
Receipts when they debuted in 1993.
- PowerShares QQQ
Series 1 - Another one of the originals. Does what it says on the
box and tracks the NASDAQ 100 index.
Industrial Average ETF Trust - Just as the SPY and QQQ track the
S&P 500 and NASDAQ 100, respectively, DIA tracks the Dow Jones
- Developed economies find themselves bedeviled by a deadly mixture
, high unemployment and misguided austerity policies. That means a
lot of the major growth is happening in emerging markets, where
ETFs are usually the best way to get diversified, lower-
exposure. However, these instruments can bite back in a big way if
conditions change, and emerging markets, even the BRICs, are
generally more volatile than their developed counterparts.
It's also important to note that many of these emerging-market
a bias towards financial companies, raw materials and
firms, which makes shifts in those crucial markets particularly
- iShares MSCI Emerging Markets Index - This is one of the big
ones. It's down about 28 percent this year, and it's a pretty good
barometer of global markets, with major holdings in Samsung,
Gazprom, Petrobras and China Mobile.
- Vanguard MSCI Emerging Markets Fund - Very similar to the iShares
fund, VWO shares many of its major holdings, though it places a
higher priority on Gazprom and adds the Industrial & Commercial
Bank of China in its top 5.
Disclosure - the author is short EEM and QQQ.