Shark Tank's Kevin O'Leary has 17 new ways for you to invest in the stock market

[RV_]

OK,

Many folks have spoken of ETFs and some understand what they are, but for this article it would do well to understand them. If you are totally familiar with ETFs then skip the italicized definition below and start on the "Excerpt" after it. In this case the definition is longer than the short article after.

 

From Investopedia:

 

"DEFINITION of 'Exchange-Traded Fund (ETF)'

An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated once at the end of every day like a mutual fund does.

BREAKING DOWN 'Exchange-Traded Fund (ETF)'

An ETF is a type of fund which owns the underlying assets (shares of stock, bonds, oil futures, gold bars, foreign currency, etc.) and divides ownership of those assets into shares. The actual investment vehicle structure (such as a corporation or investment trust) will vary by country, and within one country there can be multiple structures that co-exist. Shareholders do not directly own or have any direct claim to the underlying investments in the fund; rather they indirectly own these assets.

ETF shareholders are entitled to a proportion of the profits, such as earned interest or dividends paid, and they may get a residual value in case the fund is liquidated. The ownership of the fund can easily be bought, sold or transferred in much the same was as shares of stock, since ETF shares are traded on public stock exchanges.

ETF Creation and Redemption

The supply of ETF shares are regulated through a mechanism known as creation and redemption. The process of creation/redemption involves a few large specialized investors, known as authorized participants (APs). APs are large financial institutions with a high degree of buying power, such as market makers that may be banks or investment companies. Only APs can create or redeem units of an ETF. When creation takes place, an AP assembles the required portfolio of underlying assets and turns that basket over to the fund in exchange for newly created ETF shares. Similarly, for redemptions, APs return ETF shares to the fund and receive the basket consisting of the underlying portfolio. Each day, the fund’s underlying holdings are disclosed to the public.

ETFs and Traders
Arbitrage. Since both the ETF and the basket of underlying assets are tradeable throughout the day, traders take advantage of momentary arbitrage opportunities, which keeps the ETF price close it its fair value. If a trader can buy the ETF for effectively less than the underlying securities, they will buy the ETF shares and sell the underlying portfolio, locking in the differential.
Leveraged ETFs. Some ETFs utilize gearing, or leverage, through the use of derivative products to create inverse or leveraged ETFs. Inverse ETFs track the opposite return of that of the underlying assets -- for example the inverse gold ETF would gain 1% for every 1% drop in the price of the metal. Leveraged ETFs seek to gain a multiple return of that of the underlying. A 2x gold ETF would gain 2% for every 1% gain in the price of the metal. There can also be leveraged inverse ETFs such as negative 2x or 3x return profiles."

Advantages and examples of better known ETFs are in the original article here: http://www.investopedia.com/terms/e/etf.asp

 

Now that the interested folks that needed a primer are ready here is the item of interest I am posting about.

 

Excerpt:

 

"The ETF boom just keeps rolling.

Shark Tank investor and personality Kevin O'Leary is launching 17 new ETFs through his firm O'Shares Investments, according to a filing with the Securities and Exchange Commission.

10 of the 17 ETFs will track various FTSE Russell high-dividend indexes ranging from large market cap stocks to emerging market quality stocks. The other 7 ETFs are a mix of fixed income ETFs focusing mostly on corporate bonds.

The fees for the funds were not included in the initial filing.

Here's a full rundown of the names of the ETFs O'Leary is seeking to create:"

(The names are in the article, quite varied)

 

"According to the filing, there have been portfolio managers selected for the funds, so O'Leary's direct involvement in the ETFs is unknown.

O'Shares, a division of O'Leary Fund Management founded in 2015, currently has five ETFs trading on the New York Stock Exchange, so this will more than quadruple the number when they're added.

The O'Shares addition is just another announcement in the wave of ETFs which now allow investors to put money into a basket of securities tracking everything from the whiskey industry to the increasing obesity trend in America. Over the past 10 years, the amount of assets in ETFs has boomed from $230 million to over $4 trillion in 2016."

 

THe whole article with the names and categories of the 17 new ETFs is here: http://www.businessinsider.com/shark-tank-kevin-oleary-etfs-2016-7

[TheDuke]

I am not sure why you are posting this. It is very close to advertising.

I wouldn't be surprised that every one of his ETfs are already out there with another firm.

[RV_]

Why I posted it? Because it came in with the Business Insider articles as a point of interest that ETFs are getting popular. My goodness, I sure wish I got money for every time I wrote about a good deal I found. Is an article about Windows updates advertising? I'd better not write about Rhino lining, Eternabond tape, PEX flair it fittings, Dodge Ram trucks and Cummins engines. Mention Rotella oil? Coleman Dometic or Norcold? When we find a great repait place and tell others is it advertising or sharing the knowledge?

 

Cmon Duke, I don't even take money for advertising on my website. And most of the people here from the start of the forums know I have referred free samples to them and others.

 

Is everything OK with you bud?

 

I am sure others appreciated my research to find a good primer on what ETFs are as they also came up in our discussion about the Chinese economy and how it may affect us.

 

In a forum about investments and financing the last line of my excerpt above says it all:

"Over the past 10 years, the amount of assets in ETFs has boomed from $230 million to over $4 trillion in 2016."

 

I would think on a forum where we discuss money and investments, a market niche that has become that big in 10 years is of interest to others. Go to the article and click on the author. Was he advertising? Or discussing an area of investments that represents today $4 trillion in assets? Perhaps we might want to know what an ETF is.

[TheDuke]

I didn't mean advertising in the sense that You make money off of the site.

There are a lot of ETF companies that have been in business for many years with a track record with costs, dividends, managers, etc.

Reread your post after all the italiced info. It is all about oleary.

You know I am a proponent of ETfs but I have never suggested one company over any other.

If after rereading your post and you still disagree with me, so be it.

But as always keep on posting.

[TheDuke]

By the way, I found a App called SwiftKey keyboard. I got it for free and it might still be free. It is so intuitive it is scary.

[RV_]

Duke,

No harm no foul bud. I looked up ETFs for the first time when I got that Business insider article. I had a general idea of ETFs but looked it up and decided others might also be interested in exactly what ETFs are. That's all. We will have to agree to disagree because all of the articles about businesses will generally pay a lot of attention when biz celebs with successful businesses of their own, join in on a financial trend that I was unaware of until that article. I don't plan to invest in anything new until around 2020, if then, when we see what actually happens with Tesla, the Gigafactory, Model 3, Powerwall, Supercharger network, China factory, and if they buy Solar City, the success of their manufacturing plant for PV panels and materials.

 

I'm no guru on investing, just interested.

[FULLTIMEWANABE]

ETF's are fabulous in some ways but caution should be adhered to in other ways RV. As an extreme example I personally know: DUST is a 3X bear Gold Miners ETF trades opposite of GOLD in a nutshell. When it reaches a certain low price level it gets reverse split 10 for 1. Anyone with no knowledge looks at the current chart and 52 high and lows and thinks it was trading at $400/share but in reality it never did due to the reverse splits.

 

When one starts dabbling in new forms of investment vehicles it's crucial to understand how sometimes what we see on the surface isn't what occurred in reality and exactly how they work. I've been stuck in DUST on a reverse split and pure "fluke" more than plan helped me get out without much of a loss, but it could have been terribly painful for me personally. Skin of my teeth I think came to mind!

 

Just saying FWIW.

[RV_]

I don't like them at all but they are getting press so I wanted to know what the Business insider article was all about. Thus my definition above. And they remind me of what the Chinese are doing but in their case they are not willing to trust their stock exchanges.

 

After my reading exactly what they are in Investopedia, I decided to post it first as if one finds it too complicated they need to stay away. I was neutral and no one asked me what I thought. I always put my money where my mouth is. Right now my assets are well diversified between one stock long, spread between some more traditional funds through USAA, and properties which will be doubling in the near future I am sad to say, through an expected loss in our immediate family. Then we will realize some of our gains in real properties here and move.

 

This excerpt should be enough for anyone who is not a multibillionaire controlling them to stay clear:

 

"The supply of ETF shares are regulated through a mechanism known as creation and redemption. The process of creation/redemption involves a few large specialized investors, known as authorized participants (APs). APs are large financial institutions with a high degree of buying power, such as market makers that may be banks or investment companies. Only APs can create or redeem units of an ETF. When creation takes place, an AP assembles the required portfolio of underlying assets and turns that basket over to the fund in exchange for newly created ETF shares. Similarly, for redemptions, APs return ETF shares to the fund and receive the basket consisting of the underlying portfolio. Each day, the fund’s underlying holdings are disclosed to the public."

 

It looks like a great system for the APs.