For those investors looking to diversify their portfolio there is a set of assets called ETFs (Exchange Traded Funds) which can be made up of stocks, bonds and commodities, among others. In our country, they are quoted under the format of CEDEARin pesos and dollars
According to Balanz analysts, “They are similar to Common Investment Funds since the investor has access, with a single investment vehicle, to a set of assets.”
But unlike mutual funds, “ETFs are listed on the stock exchange and can be bought or sold in real time in the market as if they were stocks,” they add.
“The investment objective of the best-known ones is to replicate the evolution of stock indices of various sectors of the economy and in the particular case of our country they are listed under the CEDEAR format, in pesos and dollars,” they conclude.
Why invest in CEDEARs ETFs?
Operating with these certificates has a series of advantages, among which the following stand out:
- Global Reach: Possibility of investing in ETFs that replicate the most important stock indices of the world economy.
- Diversification: They are made up of a large number of assets.
- Currency: They operate in pesos or dollars.
- Liquidity: The high traded volumes allow quick entry and exit for investors.
- Transparency: In addition to being regulated by the National Securities Commission, the ETF administrator publishes its composition daily.
ETFs are publicly traded and can be bought or sold in real time in the market as if they were stocks.
What ETFs are listed on the Buenos Aires Stock Exchange and what each one means
- QQQ: It replicates the Nasdaq 100 (index composed of the 100 largest capitalization technology companies).
- ARKK: It is an actively managed ETF and invests in US or foreign companies that are considered disruptive in innovation.
- SPY: It replicates the S&P 500 index – made up of the 500 largest capitalization companies in the US.
- IWM: It closely follows the Russell 2000 Index Fund, which is made up of an equal number of US small-cap stocks.
- EEM: It replicates the performance of the MSCI TR Emerging Markets Index made up of different emerging market companies.
- XLF: It is based on the Financial Select Sector Index which includes financial services companies.
- XLE: Represents the performance of the Energy Select Sector Index which is comprised of large-cap energy companies
- DAY: Replicates the Dow Jones Industrial Average index. This index is made up of the 30 largest capitalization stocks in the USA.
- EWZ: Follows the MSCI Brazil index, which considers mid- and large-cap companies in Brazil that represent 85% of the Brazilian stock market
How much do they perform at the end of the first semester?
When there are only a few wheels left to finish the first half of the year, The big winner is QQQ, in line with what is happening with the Nasdaq, as it shows a rise of 72.5%. In second place is another New York index, in this case the SPY that reflects the S&P500, with 54% and the EEM, of companies from emerging countries, completes the podium, with 41.4%.
One step lower and with an average increase of 35%, the IWM or Russell 2000 appear, along with the DIA that replicates the Dow Jones, the XLE (energy companies) and XLF (financial companies). The list is closed by Brazilian stocks (EWZ) with 24% and innovation companies (ARKK) with 11 percent.
The risks of investing in CEDEARs are logically the same as in stocks.
What does the evolution of a CEDEAR depend on and what are the risks?
The risks of investing in CEDEARs are logically the same as in the shares or the underlying that make up the ETFs, as the case may be.
But it must be taken into account that its price will depend not only on the evolution of the underlying asset (the share or ETF abroad), but also on the movement of the free exchange rate (CCL). Consequently, the evolution of the gap between the CCL and the official dollar is captured by the peso price of the certificate. Therefore, they are useful assets to dollarize portfolios.
While, regarding risks inherent strictly to the local market, liquidity must undoubtedly be mentioned, since before investing in any of them it is advisable to make sure that they have an acceptable level of liquidity. In this sense, it is important when making a purchase decision to take into account when was the last time you traded and the average daily operations.pq
