welcome to this video on finding the top ETFs trading that stands for exchange-traded
funds by the way if you didn't know although magic here you do that so ETFs
trading is a little more challenging than most people first think and let's
dive into the details of that and help you with your trading so that you can
hopefully make more money a lot of people think that exchange-traded funds
are basically creative equal in other words if you're looking at the same
sector today we're looking at the financials so here are four different
exchange-traded funds then are all tracking the financial sector and you
would think well if they're all tracking the financial sector the point of an
exchange-traded fund is that it's basically an index of a bunch of
different stocks and that's name sector and therefore all the exchange-traded
funds from the various companies with spiders Vanguard Blackrock first trust
Guggenheim Invesco Gen Hancock fidelity whatever they should all pretty much
give the same results wrong they do not they do not and that's what this video
is all about is to help you see first of all the difference and then how to
determine which is the best one to trade for you at any given time so first of
all let's just point this out so what I've got here let's get into the basic
premise and then I'll show you a how to evaluate this for yourself so we've got
let's just look at current data we're going back 90 days so this is about
three months worth of price action and as you can see we've got a big disparity
between these four so these four are let me bring these up for you here real
quick actually it's gonna go off the screen there but look at the black one
first and that is XF or X sorry X del F that spiders and then numero dos you've
got the blue one and that's V F H so that's the band guard financial ETF
the red one is why I YF iyf and that is Blackrock and then the green one is f X
oh these are obviously the symbols that you would tape in and that's first trust
and there's many more you we could have brought up Invesco Janet Hancock
Guggenheim fidelity others like I said but just for simplicity if that will
just look it for today okay so different companies that are
providing these indexes that are treatable in very different results over
the last 90 days as you can see still we've got anywhere from about six point
three percent all the way down to three point one to nine percent so yeah big
difference right that matters about a fifty percent difference in your profits
Wow so this is that little deal this is a big deal this you need to know that's
why I'm pointing it out to you today all right so why is that how in the heck can
that help him when they're all trading we're all tracking I should say the same
industry the same sector well there are several different reasons for that
when is that as possible that certain funds are putting our tracking certain
stocks and of others another one would be the weighting so some funds will be
evenly weighted with a weight all the companies and that index the same others
will give a higher reading to the higher caps higher capitalized markets and so
that obviously will make a big difference as well another one is how
often they will rebalance so if they are going to say okay we're going to
evaluate this annually in rebalance the index as opposed to another company that
says well we're gonna rebalance a recorder well that's going to make a
difference not only in performance but also in expenses and
fourth and talking about expenses if you're treating these you also need to
look at some of the difference with regard to which are the most liquid
which have the most volume which trade the most volume this is especially
important if your short-term trading then you want something that's very
liquid and you also want to look at the bid-ask spread and the bid-ask spread
can vary quite a bit between some of the various exchange-traded funds out there
so look at that because those are expenses and then there's an expense
ratio as well that these companies chart so the expense ratio can be quite
different and I immediately looked at Vanguard because I expected them to be
the cheapest and they were very very well 0.1 percent net expense ratio but
it wasn't the lowest they were the second list that kind of supplies me but
still very very low pretty good then I looked at Power shares for chair the
three popular and they had a point six percent net ratio Wow six times higher
six times higher again not a little deal not a little deal that when they looked
into it no doubt it was because that they they turned over their portfolio
more often but again now how does that affect performance that's another thing
maybe it's more turnover will actually improve the performance but you're
paying for that more active hands-on management by their team so it always
out one thing can't isolate one thing over against another you need to put it
all together so how do we put it all together and this is what we do I put
together a chart like this now this chart is different than a typical chart
so this is called a percent change chart so if you look over here on the right
you'll see that there's no prices we're not looking at prices we're looking at
percent change so when you start it I started this particular one maybe there
you go we're here there's a little yellow line there I don't know if you
could see that very well it's very light but anyway that's where it started so
they all start at the same spot zero change zero percent change because
they're all starting yeah no change on that day okay so that
is kind of our benchmark and we're looking at okay which one performed the
others and that will vary from time to time so we'll just refer to the color
lines here since we're doing all the labels up right now so you'll see that
okay right out of the bat the black line performed the best and that's great
that's the Spyders by the way and then as it came down but then the red one
held up the best on a down market hmm and that's important because then you
got to regain that money and then the black one you know here we are now and
you can see as we've pointed out already 50% difference in the profits at the end
of 90 days but don't forget about the draw downs too that's important how much
did you end up losing now see the blue one here that lost more than 5% they
move down where is the right one here that only lost about 3% so again big
percentage difference you remember the difference between let's just round up
numbers here for example the difference between three percent or three percent
down here in six percent is not three percent it's a fifty percent difference
in your gains very important to remember that that's how I do it I use a percent
change chart look at this and I look for these markets to uh perform see which
ones are underperforming about performing and you can do this with
anything so I'm just doing the example with exchange-traded funds here ETFs for
trading defined which are the top ETFs at any given time and as you can see it
will change it will rotate so these things like expense ratios and volume
and all of that they play a part in it but the bottom line is which to perform
at because sometimes the more expensive one can exhale perform because they're
rebalancing and that might actually help the ultimate performance like this
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