Monday, December 4

ETF Cedears: which are the most chosen after the debut and which one to choose according to the investor profile

What is the main attraction of these instruments? first of all, the investors Retailers see this new option as a possibility where they can access the local market and in pesos. Second, the minimum values ​​are highlighted. According to the first survey carried out by PPI, the values ​​start from $1,000 (for the ARKK) to $6,000 (the highest value is the XLF). The third benefit, and no less important for that, unlike the Cedears, which are instruments that focus on companies, this instrument will allow not having to do such selective research work, but seek exposure to particular sectors and interests.

Finally, in terms of benefits, they are efficient in terms of investment management: not only are they more convenient in terms of value, as stated above, but they avoid a bureaucratic process since they do not have intermediaries, as the CEDEARS do – in this case Comafi- with direct cash accreditation.

Another interesting element is the strong interest in the NASDAQ 100 (QQQ) ETFs, which replicate the Nasdaq 100 index that includes the 100 largest non-financial companies in market capitalization. Also of interest is the Cef Select Sector SPDR Energy (XLE) ETF, which represents the energy sector.

On the other hand, Maximiliano Suárez de Bull Market Group affirmed that this option is well received by investors since it allows “diversifying risks”. According to Suárez, local investors turned strongly to the CEDEARS, emphasizing the “foreignization” of the market: he stated that initially, the Cedears represented 1 or 1.5% of what was traded, while now, it is the shares that have become be 1% of what is traded per day. “Today the Cedears trade between two and three times more than local stocks,” he added.

What are the best options?

  • SPDR S&P 500 (SPY): it is the most popular as it includes the 500 largest companies in terms of market capitalization. It is the most acceptable for all types of investors. Paulino Seoane, Head of Investment Idea from Balance highlights that: “By investing in the SPDR S&P 500, the investor passively follows the performance of American companies and, as the index is self-maintaining over time, each quarter the companies that comprise it are readjusted and thus the investor may be copying the outcome of the market over time.
  • Invesco NASDAQ 100 (QQQ): “It is known as the technology index, it is the most innovative but also one of the most volatile,” said Suárez. It is for risky investors, taking into account the international context where technology companies are being affected by the Fed’s rate hike.

At the same time, Balanz points out that it is necessary “to wait to see the results of the balance sheets of the companies and how the FED’s policies are going to be developed from now on. Mainly, what degree of acceleration are they going to apply to monetary tightening?” and how many rate hikes there will be in the year that will depend on how the unemployment and inflation numbers come out.

  • IShares Trust Russell 2000 (IWM): It is the index of companies with the highest capitalization. It also applies to risky investors: with an economic boom they have a high chance of going up but if it doesn’t happen, “they are the first to suffer it,” they said from Bull Market.
  • IShares MSCI Emerging Market (EEM): Experts agree that it is one of the riskiest since it holds mid-cap stocks from emerging markets.
  • The Select Sector Financial (XLF): is a financial ETF that will be highlighted this year by the Fed rate hike. It is the most expensive ETF so far.
  • Cef Select Sector SPDR Energy (XLE): ETF of the energy sector. Balance stresses that both the financial sector and the energy sector “are the ones that benefit the most from the inflationary context and the rise in rates.”
  • SPDR Dow Jones Industrial (DIA): It has a number of smaller companies related to the traditional industry. It is the one for a more conservative/traditional investor
  • IShares MSCI Brazil Cap (EWZ): “It is for those investors who want to bet on the development of Brazil, which is a country that with ups and downs has shown itself to be much more stable than Argentina,” they added from Bull Market. But PPI, stated that at the same time, is one of the most volatile.
  • ARK Innovation (ARKK): is one of the most popular. For Bull Market, it is the riskiest fund due to the economic conditions faced by listed companies that did benefit from low rates and the boost they got from the coronavirus. Some of the companies that operate are Tesla, Coinbase and Square. It is one of the cheapest ETFs for a retail investor.