Overview of ETF strategies

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ETFs can be bought and sold only through a broker and cannot be redeemed with the issuing fund other than in very large aggregations. Investing in ETFs entails stockbroker commission and a bid-offer spread which should be considered fully before investing. The market price of ETF Shares may be more or less than net asset value.

All investments are subject to risk, including the possible loss of the money you invest. Investments in bond funds are subject to interest rate, credit, and inflation risk. Governmental backing of securities applies only to the underlying securities and does not prevent share-price fluctuations. High-yield bonds generally have medium- and lower-range credit quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit quality ratings.

There is no guarantee that any forecasts made will come to pass. Past performance is no guarantee of future results.

Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility. Stocks of companies are subject to national and regional political and economic risks and to the risk of currency fluctuations, these risks are especially high in emerging markets. Changes in exchange rates may have an adverse effect on the value, price or income of a fund.

Asset allocation	You can build a portfolio entirely of broadly diversified ETFs to achieve diversification across asset classes.
Sub-asset allocation	ETFs can be used to target specific market segments within the broad asset classes.
Active and passive combinations	Combining index ETFs with low-cost active funds and/or active ETFs may offer diversification and the opportunity for outperformance.

Portfolio completion	ETFs can be used to fill gaps in a portfolio or to build customized portfolios.
Cash equitization	ETFs are an option for an investor with a large temporary cash position or when transitioning between asset managers.
Risk management	Investors can short sell ETFs to offset potential losses in their long positions.
Market rotation	Often considered a contrarian approach, market rotation involves knowingly overweighting or underweighting certain market segments or industry sectors.

Strategies

Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.

Overview of ETF strategies

Strategic uses

Tactical uses

Before moving forward with a strategy, consider the five "Ts"

ETF fundamentals

Basics

Indexing

Trading

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