Trends in Exotic ETFs

Retail Investing 28 Aug 2006

By: Yang Rong
Published: February 20, 2006

The explosion of the ETF industry now provides many more tools for alpha extraction and porting… 

Excerpts:

Commodity ETFs: Commodities in general are typically a good hedge against inflation and stocks over a sustained period. The value of commodity ETFs is tied directly to the value of the commodity in question.

Dividend ETFs: The intention of Dividend ETFs is to give investors opportunities to access dividend paying companies. 

Inflation-linked ETFs: The inflation-linked ETFs commingle with the characteristics of ETFs and those of bonds or indices; they are supposed to improve interest rate risk management.

REIT ETFs: Nowadays, Real Estate Investment Trusts (REITs) are attractive as diversifiers that tend to have stock-like returns and risk and pay high dividends, but are relatively uncorrelated with other asset classes.

Semi-active ETFs: Some ETF providers like PowerShares LLC take a semi-active approach to investing. This method pegs ETF products to non-traditional intelligent indices built by using quantitative analysis, such as special microcap indices or small groups of stocks.”

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