Prime ETFs – what and when to use
Prime ETFs features those indexes that are giving active mutual funds good competition in terms of performance. Prime ETFs features indexes that fit a niche space in your portfolio or where you do not have options in the mutual fund space. By using Prime ETFs, you will be able to diversify your portfolio to include low-cost options that add value to your portfolio and rounds it out.
In Prime ETFs, we gives the top ETFs that best track their index, and where trading volumes are satisfactory. Therefore, you can hold a stock market index to add zing or bring differentiation to your portfolio.
You combine the low-cost, no fund manager risk benefits that ETFs offer. So your portfolio covers the best of available opportunities, whether it is mutual funds or ETFs.
Great portfolio add-ons
You can complement your portfolio with passive index investing, reducing portfolio cost and improving portfolio return capacity. Prime ETFs features the list of top ETFs with which you use to offset your active mutual fund portfolio or with which you can be a passive-only investor.
Where active funds are struggling to beat their indices or the index funds have unique propositions it makes sense to look at them to complement your portfolio with passive investing. In the large-cap space, for example, the odds are against your hitting upon right fund to beat the benchmark. In many factor-based indices the mutual fund space does not offer many options. These indices can be great style diversifiers in your portfolio.
Good indexes only
Prime ETFs are built by putting a filter on the quality of indices. Our top ETF list houses those market indexes where they challenge actively-managed mutual funds, or are broad-market indices. Next, Prime ETFs feature indices where the index’s strategy is not replicated by funds. We don’t give indices just because there are ETFs available on them. The index needs to be able to work for you in a way that mutual funds don’t. And that’s what you get in Prime ETFs.
ETFs that track well
Prime ETFs has those ETFs that mirror their index the best. All ETFs aren’t equal in their tracking error. There are many factors that go into how well an ETF tracks its underlying index. And in ETFs, tracking error has many layers of complexity. So we look at returns in different periods, compare the ETF’s market price to its NAV, compare the right index and so on. This way, we ensure that Prime ETFs have low deviations from their underlying index and you get the returns that best match the index.
ETFs with good volumes
One of the biggest challenges in ETFs is in identifying ETFs with healthy turnover and which are traded steadily on all days. There are ETFs that may have healthy volumes on some days and no trading on other days. Not just that. The volume per se in some of the exotic ETFs are so poor that you cannot possibly be risking investments in them.
In Prime ETFs, we look for consistency in trading volumes and we look at liquidity. This matters because low liquidity makes it difficult for you to buy the ETF and increases tracking error. So you can be assured that you’re able to buy and sell ETFs with ease and low impact costs.
Explanations and alerts
How do you know what kind of index a Prime ETF is built on? What role can it play in your portfolio? Are there risks you need to be aware of? Every Prime ETF comes with a brief on the nature of index, why we picked the index and ETF, and how to use it in your portfolio. If there are alerts and nuances you need to be aware of, we sound you off. We give you detailed research reports on the index so you know what to expect. In this way, you can pick the ETF that suits your portfolio the best.
The ETF space is growing, and this can throw up new opportunities. With more interest in ETFs, troubles with liquidity can also change. We review the ETF list every quarter to ensure that the top ETFs we recommend are the best options there are.