In the previous article I looked at leveraged ETFs as a way to avoid the disadvantages of using margin.Â Leveraged ETFsÂ also provide most of the same benefits of traditional ETFs.
The most popular ETFs in the market today represent largeÂ pools of stock and are usually modeled after popularÂ stock indexes. For example, the examples I used in the last videoÂ of the SPY and SSO are both modeled after the S&P 500Â stock index. There are ETFsÂ and leveraged ETFs that follow Dow, Nasdaq andÂ Russell indexes as well.
The advantageÂ of using an ETF or leveraged ETF that represents a pool of stock orÂ an index is that it is self diversified. Traders can reduce someÂ of their market risk through diversification, whichÂ makes these ETFs very attractive.
The other type of diversification that traders are typically interested in is asset class diversification. There are ETFs that representÂ the valueÂ and prices ofÂ other asset classes like currencies, commodities and bondsÂ that can help further improve your portfolio diversification.Â
For aggressive traders, it is possible to use leveraged ETFs to both diversify across asset classes as well as increases your buying power.Â In today's video we will contrast two versions ofÂ non-stock gold ETFs in an unleveraged and leveraged version.Â These are new products but are quicklyÂ giving more options to individual portfolio managers to manage risk and take advantage of opportunties. Â Â Â Â
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