deronwagner
Registered: Aug 2002
Posts: 192 |
08-23-02 02:28 AM
There are presently 257 ETFs trading worldwide, although American traders do not have access to all of them. The American Stock Exchange (Amex) is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 121 ETFs to date.
The three most popular and liquid ETFs are QQQ (the Nasdaq-100 index tracking stock), SPY (the S&P 500 index tracking stock), and DIA (the Dow Jones Industrial Average index tracking stock). QQQ is so liquid that it trades an average daily volume of about 107 million shares per day, making it ideal for short-term trading. SPY trades an average of 37 million shares per day, while DIA trades over 8 million shares per day. These three ETFs provide a multitude of trading opportunities on any given day, all with lower risk than individual stocks. In addition to these three ETFs, there are 118 more domestic ETFs, which I have grouped by family below:
HOLDRS - This is an acronym that stands for HOLding Company Depositary ReceiptS (pronounced "holder"). These securities represent ownership in the common stock or American Depositary Receipts (ADRs) of specified companies in a particular industry, sector or group. Issued by Merrill Lynch, there are currently 17 different HOLDRS. Of these, there are 6 that trade an average daily volume of at least 300,000 shares per day (based on the monthly average daily volume of the past three months). With the exception of two of them, all the HOLDRS track specific market sectors or industries. The most popular HOLDRS are SMH (Semiconductor Index), BBH (Biotechnology Index), PPH (Pharmaceutical Index), and OIH (Oil Service Index).
iShares - Issued by Barclays Global Investors, there are currently 79 different iShares. Of these, there are 9 that trade an average daily volume of at least 300,000 shares per day (based on the monthly average daily volume of the past three months). The composition of iShares consists of the following types of ETFs: industry/sector tracking, S&P/Russell (broad-based) index tracking, international equities, and the recently launched fixed-income shares. The fixed-income iShares, launched in July 2002, allow you to actively trade corporate and government bonds, just like you do with stocks. Being an equities trader, I personally am very excited to start trading these fixed-income ETFs.
SPDRS - There are currently 11 different SPDRS (pronounced "spiders") which is an acronym for Standard & Poor's Depositary Receipts. Each SPDR is either issued by State Street Securities or PDR Services, LLC. Of these, there are 6 that trade an average daily volume of at least 300,000 shares per day (based on the monthly average daily volume of the past three months). Two of the SPDRS are broad-based(SPY and MDY), while the rest track specific market sectors or industries (Select Sector SPDRS). The most popular SPDR is SPY, which trades an average daily volume of over 37 million shares and is composed of the equities in the S&P 500 index. Also popular are MDY (MidCap SPDR) and XLF (Financial Sector SPDR), each of which trade about 2 million shares per day.
In addition to the above, there are also 8 ETFs in the streetTRACKS family, as well as the Fortune 500 and Fortune 50 tracking stocks, all from State Street Brokerage. Finally, there are two ETFs in the VIPER family from Vanguard. All twelve of these ETFs are too illiquid for short-term trading, so they do not warrant much additional discussion.
Although ETFs are relatively new, they are quickly becoming the rage for traders looking for better trending, better diversified, and lower overnight risk positions. As they continue to grow in popularity, more trading opportunities will arise as average daily volume increases and new ETFs are issued. There are presently 23 ETFs with an average daily volume greater than 300,000 shares per day, enabling a wide selection of daily trading opportunities.
We are currently working on a comprehensive database of ETFs that are suitable for short-term trading. The ETFs will be grouped by type (sector tracking, broad-market tracking, international, or fixed-income) and will include data such as the individual securities that comprise each ETF. I will share this database with everyone when it is completed.
|
