ETFs or Exchange Traded Funds are growing more popular, especially for those who are looking to diversify their portfolio. But before we get into that, let’s take a step back and discuss what ETFs are. An ETF is essentially a fund that consists of a mixed basket of assets or an index whose performance is tracked. With ETF CFDs, people can trade on price movements of hundreds of stocks within a certain sector or index, without having to purchase the underlying assets. The rise of ETFs has come about, giving traders a whole new world of options. There are 5 types of ETFs: commodity ETFs such as ETF gold that track different stocks and companies involving gold, bond ETFs, international ETFs which include foreign stocks, sector ETFs which are based around a particular industry, and of course stock ETFs. Let’s see how some of the most popular ETFs are performing in 2021 and see how you can invest in ETFs with app platforms as CFDs.
Popular ETFs in 2021
· SPDR S&P 500 ETF: This is the largest ETF in the markets and one of the most popular, with $360 billion worth of assets under management. This ETF trades over 74 million shares per day, and tracks the ever-important S&P 500 index. The S&P 500 index is used as a benchmark, causing this particular ETF to soar in investor popularity. This year, the SPDR S&P 500 ETF has been marching higher, as indices like the S&P 500 have continued their gains, meaning the heavily traded ETF has gained 15% over the first half of 2021.
· Invesco QQQ ETF: This ETF tracks the Nasdaq 100 index, which is the top 100 biggest players in the Nasdaq market. The Nasdaq 100 is mostly made up of technology companies, so this ETF has a big lean towards tech. In 2020 and 2021, we’ve seen big tech make huge gains in the markets, so this ETF has been on the up. The Invesco QQQ ETF showed returns of 25.9% every year for the last three years, and this year the ETF has already gained 13% and may possibly continue on this upward journey.
· Vanguard Growth ETF: As the name suggests, this ETF is focused on growth stocks, particularly large capitalisation growth stocks in the US. Companies like Apple, Microsoft, Amazon, Google (Alphabet) and Facebook, which make up a huge part of this ETF. It tracks over 280 stocks in total through the CRSP US Large Cap Growth Index. In the month of June alone, the Vanguard Growth ETF has risen by 6.6% as traders flock to growth stocks.
· SPDR Gold Shares ETF: This is one of the popular ETF gold options for those looking to add this shiny commodity to their portfolios without having to purchase any actual gold. This year, gold ETFs have been on a noteworthy ride and this ETF in particular added $1.6 billion in May, which was an increase of 2.7%. If you’d like to add gold to your portfolio, an ETF gold option offers you the opportunity to expand into this sector and get a better understanding of its performance.
· Vanguard Energy Sector ETF: The world’s focus has shifted towards energy this year as we recover from the pandemic and economies increase their output again, which means that energy ETFs are in the spotlight. This ETF tracks the performance of the MSCI US Investable Market Energy 25/50 Index and has $5.45 billion of assets under management. This year the Vanguard Energy Sector ETF has risen by 51.5% so far, with the future looking interesting.
Invest in ETFs with app platforms as CFDs
For many traders, the ability to invest in ETFs with app platforms as CFDs gives them the opportunity to take advantage of price movements in both directions—increases as well as decreases—of many ETFs without having to purchase the underlying asset. You’re essentially trading on volatility, so if you expected the price of, for example, an ETF gold to rise, you’d open a ‘Buy’ deal or ‘Go long,’ however if you expected it to fall, you’d open a ‘Sell’ deal or ‘Go short.’ As with any investment channel, make sure to calculate the amounts you’re willing to risk, and choose a broker that offers Negative Balance Protection, so you can never lose more that you’re indebted to them.
Before you start to invest in ETFs with app platforms as CFDs, do your research on regulated brokers and especially check out their social channel. The social channel of a broker can give you a clearer view of the broker’s personality, exclusive market insight and updates, and even fun facts about the financial world. It’s always best to do your homework to find a reliable broker before you invest in ETFs with app platforms as CFDs so that when you’re finally ready to trade, you can enter the markets with confidence.