September 08, 2010 at 11:10 AM EDT
Five Ultra-Concentrated ETFs
In many instances, ETFs have allowed more active investors to change their strategy for allocating assets and alter the manner in which they seek to generate alpha. Instead of seeking to identify undervalued companies through detailed analysis of financial statements, many now implement a more high level approach that includes identifying sectors, regions, or even general asset classes that will outperform in the short- to intermediate-term. ETFs are ideal for such a strategy because of the immediate diversification they provide; spreading assets across dozens or even hundreds of individual securities will generally allow investors to minimize exposure to any one company. But there are, of course, a number of exceptions. The suite of HOLDRS products from Merrill Lynch can become concentrated because companies that are acquired or go bankrupt are not replaced [see Five Facts About HOLDRS Every Investor Should Know]. Even beyond HOLDRS, a number of popular ETF products [...] Click here to read the original article on ETFdb.com. Related Stories: Four Little Known Secrets Of Ultra-Popular ETFs Five Ultra Popular ETNs ProShares Launches Ultra Treasury ETFs (UBT, UST)
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