There are more than 13,000 global exchange-traded funds available for investors.
Shortlisting it by ETFs with assets under management greater than $10 million, the active number comes down to nearly 10,000.
While $10 million is a bare minimum amount considered for investment, other major investors would want to seek a higher liquidity AUM for participation.
Nevertheless, the total AUM managed by these ETFs is around a whopping $10.5 trillion, according to the latest figures.
To understand its significance, the net AUM growth has seen remarkable growth, especially over the past six years.
During 2016-2017, the net AUM base was in the range of $3.5 trillion. The period post-2017 has seen a threefold growth in the net asset base of these ETFs.
Amid such a diverse product base, choosing a suitable ETF has become a bit of a complex puzzle to decode but there are a few simple and essential questions that you can ask to determine what is best for you.
Investment needs
The foremost point investors need to consider is establishing why they need to enter the ETF space.
For instance, a new entrant to the market would like to invest and enter via a US large-cap passive ETF that tracks and invests in big US blue-chip companies.
On the other hand, existing investors with sizeable long-term holdings in prominent blue-chip names would want to invest in actively managed ETFs that continuously change their allocations over a period of time.
Type and duration of ETFs
Once an investor has decided to allocate a certain amount for an ETF, the next crucial step to consider is determining which ETF to invest in and the duration.
While certain passively managed funds such as SPY (SPDR S&P 500 ETF) typically require investors to be patient and hold for the long term, actively managed ETFs such as the JP Morgan Equity Premium Income ETF usually require investors to look for returns and go for entry/exits actively. This is due to the active and high beta nature of such ETFs.
Diversification to other ETF baskets
Investors may also consider diversifying beyond the existing ETF to fulfil other investment objectives.
For instance, an existing long-only US portfolio holding may want to use an ETF that buys out of the money puts or a collar strategy on the same basket of instruments (ETFs like HEQT and XTR).
Similarly, an investor with an active equity-only portfolio may want to diversify to fixed income using ETFs like TLT and SHV, among others.
Risk tolerance
The returns generated on any investment product are often a function of an investor’s risk-taking capability.
The very reason for the existence of innovative, synthetic products linked to derivatives is to provide investors with added returns to their existing passive portfolio holdings.
Investors unwilling to take a risk can, instead, focus on passive ETFs and even traditional bond and bank money market products.
Below are the key points to consider when evaluating a risk tolerance approach.
Performance measures of an ETF
This primarily refers to how closely the ETF tracks and matches its underlying domain and product holdings.
It involves knowing the ETF’s tracking error and tracking difference for establishing its actual performance.
Investment style and structure
A passively managed ETF invests and tracks the performance of a well-established benchmark index belonging to a particular category, sector or country.
On the other hand, an actively managed ETF uses its in-house strategies and products to achieve its desired and stated investment objectives.
Picking the ETF index
Broadly filtered, ETFs can be categorised into the following:
Region: global, domestic, country-specific, demographic-specific.
Asset class: equities, fixed income, hybrid, alternate like real estate, commodity, or synthetic derivative trackers.
Sector: individual equity sectors like tech, energy, consumer staples; or market cap status like mega cap, large cap, mid cap, small cap.
Identifying a suitable trade-off
An ETF with a standard objective to provide constant dividend/income returns would likely have holdings in established divided aristocrats and investment-grade bonds. Such ETFs would typically be off low beta and low alpha profiles.
On the other hand, an aggressive and high alpha/high beta would typically invest in high-growth and beaten-down names.
There is no better time than today to start planning and allocating towards investment goals
Vijay Valecha,
chief investment officer, Century Financial
The investor needs to make a suitable trade-off and imagine the worst-case scenario before investing.
Knowing when to enter and the costs involved
Entering a growth ETF when the market seems wobbly would be considered a lousy investment approach.
On the other hand, starting a systematic investment plan during a market downturn or when the market is already consolidating in a bear market would mean the investor achieving good returns in the longer term.
The investor also needs to bear in mind the costs involved, which include the fund’s expense ratio and the transaction charges for entering and exiting.
Not taking any risk is itself a significant risk. Waiting too long for a particular ETF level or overestimating the depth of a current market sell-off or the ongoing market bull run can prove costly.
There is no better time than today to start planning and allocating funds towards investment goals.
Vijay Valecha is chief investment officer at Century Financial
Jewel of the Expo 2020
252 projectors installed on Al Wasl dome
13.6km of steel used in the structure that makes it equal in length to 16 Burj Khalifas
550 tonnes of moulded steel were raised last year to cap the dome
724,000 cubic metres is the space it encloses
Stands taller than the leaning tower of Pisa
Steel trellis dome is one of the largest single structures on site
The size of 16 tennis courts and weighs as much as 500 elephants
Al Wasl means connection in Arabic
World’s largest 360-degree projection surface
On the menu
First course
▶ Emirati sea bass tartare Yuzu and labneh mayo, avocado, green herbs, fermented tomato water
▶ The Tale of the Oyster Oyster tartare, Bahraini gum berry pickle
Second course
▶ Local mackerel Sourdough crouton, baharat oil, red radish, zaatar mayo
▶ One Flew Over the Cuckoo’s Nest Quail, smoked freekeh, cinnamon cocoa
Third course
▶ Bahraini bouillabaisse Venus clams, local prawns, fishfarm seabream, farro
▶ Lamb 2 ways Braised lamb, crispy lamb chop, bulgur, physalis
Dessert
▶ Lumi Black lemon ice cream, pistachio, pomegranate
▶ Black chocolate bar Dark chocolate, dates, caramel, camel milk ice cream
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
UAE currency: the story behind the money in your pockets
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
UAE currency: the story behind the money in your pockets
CHATGPT%20ENTERPRISE%20FEATURES
%3Cp%3E%E2%80%A2%20Enterprise-grade%20security%20and%20privacy%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Unlimited%20higher-speed%20GPT-4%20access%20with%20no%20caps%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Longer%20context%20windows%20for%20processing%20longer%20inputs%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Advanced%20data%20analysis%20capabilities%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Customisation%20options%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Shareable%20chat%20templates%20that%20companies%20can%20use%20to%20collaborate%20and%20build%20common%20workflows%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Analytics%20dashboard%20for%20usage%20insights%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Free%20credits%20to%20use%20OpenAI%20APIs%20to%20extend%20OpenAI%20into%20a%20fully-custom%20solution%20for%20enterprises%3C%2Fp%3E%0A
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Visit Abu Dhabi culinary team's top Emirati restaurants in Abu Dhabi
Yadoo’s House Restaurant & Cafe
For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.
Golden Dallah
For the cappuccino, luqaimat and aseeda.
Al Mrzab Restaurant
For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.
Al Derwaza
For the fish hubul, regag bread, biryani and special seafood soup.
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Read more from Mina Al-Oraibi
Killing of Qassem Suleimani
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
BRIEF SCORES
England 228-7, 50 overs
N Sciver 51; J Goswami 3-23
India 219, 48.4 overs
P Raut 86, H Kaur 51; A Shrubsole 6-46
England won by nine runs
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
Brolliology: A History of the Umbrella in Life and Literature
By Marion Rankine
Melville House
