Strategies
Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.
Cash equitization
ETFs can also be a good option for an investor who has a large temporary cash position, or when transitioning assets between managers.
Such a cash position may tilt an investor's portfolio away from its targeted equity or fixed income allocation. Over extended periods, that position can result in performance shortfalls relative to benchmarks or financial goals. Why? Historically, equity and fixed income markets have had more periods of positive returns than periods of negative returns. The longer the time period, the stronger this performance bias. Investing a temporary cash position in ETFs reduces the likelihood of such performance shortfalls.
Point to consider
- Equities could underperform cash during the transition period.
- Trading costs may offset some of the potential advantages.
ETF fundamentals
Basics
Learn the basics of ETFs, including their history, how they compare to mutual funds, what types are available and more.
Indexing
Indexing, how ETFs are indexed, the differences between excess return and tracking error, and more.
Trading
Learn how ETFs trade, where they get liquidity, common order types, how premiums and discounts work and more.