ETF's (Exchange Traded Funds)

Instead of a single stock this month, I'm really high on ETF's. More specifically, sector ETF's. No, it's not a drug, but exchange traded funds. Basically, they're like mutual funds (a collection of stocks) that trade like a single stock. Unlike a mutual fund, there is no minimum amount to buy and they are actively traded throughout the day. Expense ratios are low compared to most mutual funds (Vanguard being the exception). ETF's are the fastest growing segment in the investment world, i.e. they're hot! There are funds available according to index and sector. For example, the DDD (called diamonds) tracks the Dow Jones Industrials. QQQ (cubes) tracks the Nasdaq 100. Others follow any of the Goldman Sachs or S&P indexes. If you already have a mutual fund that mimicks one of the indexes, there's no need to duplicate them. Rather, buy an ETF in an index or sector that you're lacking. I really like them because it allows you to rotate sectors easier than a mutual fund and, it's less risky than a single stock. More importantly, most of the sector ETF's are made up from 40% to 60% of the top 10 stocks in that sector. Consider them highly concentrated mutual funds. I like IYH (Dow Jones US Healthcare index), IXC (S & P Global Energy) and IGM (Goldman Sachs technology index). iShares offers most of the ETF's available. Check them out.

STOCK OF THE MONTH