ETF Funds

ETF Funds – Sector

Sector ETF funds tend to trend upwards at the same rate and are therefore attractive opportunities due to their rebalancing between sectors. Sector exchange traded funds are popular with short term traders and momentum investors. In today’s article we list below facts associated with sector exchange traded funds.

  1. Sector exchange traded funds are separated into four groups. First, Global, second, US or international, third, the main industry sub-groups that comprise the sector, and last, the smaller group of companies within each sector.
  2. Investors will overweight one sector if they feel it will over perform. This means that you would still diversify your portfolio of exchange traded funds however you would just add one more ETF to overweight a specific sector.
  3. There are numerous lists available that list sector ETF funds. Some include the Primary US Sector ETFS, the Global Sector Exchange Traded Funds, the total US market ETF, the broad foreign stock ETF, the broad bond ETF and more. As you can see there are many exchange traded funds to research.
  4. Since sectors are trendy in nature, long term investors opt to build a diversified portfolio to provide for opportunities for rebalancing using one of the sector ETF families on the various lists mentioned above.
  5. Sector exchange traded funds have a tendency to be more concentrated than broad index exchange traded funds . As a result these funds can more volatile and therefore include a greater long term risk is the largest stocks in the ETF perform poorly.
  6. Sector ETF funds also have higher expense ratios than the index exchange traded funds.

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Please continue your education and read about the ETF Market .