Easy access to global equity markets | The Financial Express

Easy access to global equity markets

US ETFs allow access to a number of themes in the US stock market as well as the benefit of diversifying in foreign stocks.

Easy access to global equity markets
One ETF purchase can be used to invest in hundreds of companies or bonds, or you can diversify across industries or themes.

Stock picking is not every investor’s cup of tea. And, for those looking to own US stocks for the sake of international diversification, the process to select the right stock may be equally tedious. An alternative to buying individual stocks is to buy an exchange-traded fund (ETF). ETFs make the task easier as it is structured almost similar to a mutual fund scheme. The primary difference between ETF and index mutual funds is the fact that the former can be bought or sold during stock exchange trading hours.

One ETF purchase can be used to invest in hundreds of companies or bonds, or you can diversify across industries or themes. For example, the INVESCO Nasdaq 100 ETF with the ticker QQQ aims to mimic the investment performance of the NASDAQ-100 index prior to fees and expenditures. Similarly, the FTSE China Incl A 25% Technology Capped Index’s investment performance (net of fees and expenditures) is what the Invesco China Technology ETF aims to mimic. It essentially gives you easy access to the Chinese technology sector. Also, ETFs that are sector-specific is also an option. ETFs that track the publicly traded equity securities of the firms in the Energy Select Sector Index include the Energy Select Sector SPDR Fund.

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The SPDR S&P 500 ETF Trust (SPY), also referred to as the SPY ETF, is the ETF to use when investing in S&P 500 companies. The performance of SPY closely mirrors that of the S&P 500 index. By purchasing SPY ETF, you can have exposure to some of the top US firms across eleven key industries of the S&P 500 index. The S&P 500 index is usually regarded as the finest single indicator of large-cap US equities. Information technology, health care, and communication services are the top three industries in the S&P 500.

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Invesco QQQ ETF is the ETF to buy for investing in Nasdaq 100 stocks. With just one investment, you may gain access to all Nasdaq 100 businesses, including Apple, Google, Microsoft, and more, thanks to the exchange-traded fund QQQ. In addition, QQQ exposes investors to businesses that are pioneering long-term, game-changing trends including Augmented Reality, Cloud Computing, Big Data, Mobile Payments, Streaming Services, Electric Vehicles, and more.

Getting exposure to a market that would otherwise be challenging to invest is simple and affordable through ETFs. US ETFs allow access to a number of hot themes in the US stock market as well as the benefit of diversifying in foreign stocks.

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First published on: 06-11-2022 at 08:20 IST