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David Fry
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David Fry writes a subscription newsletter focused on technical analysis of exchange-traded funds, called ETF Digest (www.etfdigest.com). Dave founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and... More
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Create Your Own ETF Hedge Fund, a DIY ETF Strategy for Private Wealth Management.
    Jan 3, 2012 4:28 PM | about stocks: EFA, VEA, EWC, EFV, IDV, DWX, SCHF, DOO

    There is a fast growing number of international small cap ETFs with some only recently being issued. This is one sector where growth in the number of issues available will grow quickly along with other international subsectors. Currently there are about 40 issues available with not all of them seasoned yet.

    The issues in the list are from a variety of issuers including: iShares, SPDRs, Van Eck, Schwab, Guggenheim, WisdomTree and so forth. These are linked to proprietary indexes or Dow Jones, S&P, Russell, Van Eck and others.

    Over the past few years there has been a push and desire to add more international issues to investor portfolios. This has occurred because many developing countries are experiencing higher economic growth rates than more developed countries. Demographics is some emerging markets is superior given a younger population making the consumer sector compelling as well as infrastructure needs. However, historically many international markets have higher volatility characteristics than more established sectors. In 2011 a global debt crisis emerged causing many developed nation’s markets, particularly in Europe, to experience unusually high volatility and underperformance. This is something that has negatively affected many of the featured ETFs in this category.

    Irrespective of recent market performance we rank the top 10 ETFs more by their structure as opposed to current performance. We utilize our proprietary stars system as outlined below. If an ETF you’re interested in is not included but you’d like to know a ranking send an inquiry to support@ETFDigest.com and we’ll attempt to satisfy your interest.

    Strong established linked index
    Excellent consistent performance and index tracking
    Low fee structure
    Strong portfolio suitability
    Excellent liquidity

    Established linked index even if “enhanced”
    Good performance or more volatile if “enhanced” index
    Average to higher fee structure
    Good portfolio suitability or more active management if “enhanced” index
    Decent liquidity

    Enhanced or seasoned index
    Less consistent performance and more volatile
    Fees higher than average
    Portfolio suitability would need more active trading
    Average to below average liquidity

    Index is new
    Issue is new and needs seasoning
    Fees are high
    Portfolio suitability also needs seasoning
    Liquidity below average

    We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions. These are highlighted by rectangular images in many of the charts that follow.

    For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

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