Earlier here in the first part of our ETF Post from our coming Q2 Newsletter, we spoke of the creation and massive growth.
In the Second Part here of our ETF Post we showed the large number of different asset classes the ETF’s are now available …. and growing fast….
Here is a reminder, of just how many Assets ETF’s now encompass..
The NAV or Net Asset Value – Discount, Premium and Mismatch
NAV Or Net Asset Value is the true value of the underlying assets… recall the ETF is a basket of assets, originally the first, SPY or “Spider” the S and P 500 Stocks (US large company stocks)….
The SPY is easily tracked, rarely deviates from the underlying value (NAV) and trades very liquid (constantly).
Far away from core indexes, there are now ETF’s that currently trade instantly but have holdings that in some cases may take days, weeks, or even months to liquidate the underlying asset.
Logically… A mismatch of this magnitude can lead to a miss pricing of the asset, especially during stress.
Examples include, floating rate funds, high yielding (low quality) or synthetic types of ETF’s.
As a best practice, staying away from unique and small ETF’s is a good idea.
Have a Great “Which ETF’s to Avoid” Day!
February 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale
Hello and Welcome to our February 2020 Financial Planning and Capital Market Update!
If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!
We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
Hope you enjoy!
February – 2020 Video
Financial Planning Tip (s) –
All About the ETF (Exchange Traded Fund)
In an abbreviated three part series, a preview to our extended Q2 Newsletter Article, we discuss the origination of the very first Index ETF called SPY nick named the Spider and then the proliferation, and finally in part 3 of our series the dangers of non liquid ETF’s during stress,… never knowing stressful times were just around the corner.
Here are links to each post:
Capital Market Comments
This is a year to date graph of the S&P 500, Dow Jones and the Russell 2000 (Small Companies) indexes.
A silly but true Wall Street Saying comes to mind…
We left a different chart off because it looks more dramatic and there is enough drama around the Virus and Market Reactions.
Couple of Interesting Statistics for you to keep the perspective
Possible Chance – All time 10 Year Treasury Low
The chart below is of the 10 year treasury yield, which loosely correlates to Mortgage rates…
This is an all time low!
We would wait a little before actually taking action, as the swift movement down in rates is likely not reflected yet- but get ready….
Touch base with your Mortgage Professional or us –
Consider Lowering and Locking any fixed rate mortgages or loans!
Here is a Detailed Article on our Thoughts
Have a Great Day – Talk to you at the end of March!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
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Posted in General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Video
Tagged 10 Year Treasury, Corona Virus, ETF, Index Returns, Spider, SPY