Exchange Traded Funds, an alternative way to invest.

ozzage wrote: »

I can't always do what I want because of lack of availability of ETFs or because my broker (Interactive Investor) doesn't let me trade them. For example I was considering buying a shipping ETF (SHPP) but I can't trade it, which is frustrating.

Not really. They did mumble something about USD but it was clear that they had no idea.

There are two of those listed with ETF Securities, this one is listed in Sterling
http://www.etfsecurities.com/fund/etfs_fund_shipping_large_cap_gb_en.asp

This one in USD
http://www.etfsecurities.com/fund/etfs_fund_shipping_large_cap_en.asp

On the US front regarding ETF's I'll start with the commentary type resourses, at least the ones I use on a regular basis, I'm sure there are more

Seeking Alpha Takes you to the ETF section, but the site itself covers a range of US orientated investment topics.

ETF Trends

ETF Guide

timarr wrote: »

If you're investing in ETF's just be careful what the underlying investments are. Few examples.

Some of the commodity ETF's last year ran into problems because it turned out they were underpinned by derivative contracts with AIG, the big US insurer that ran into huge financial problems and had to be bailed out by the US government. Having ETF's underpinned by complex derivatives may not be a bad thing but it probably exposes you to a different kind of risk than you were expecting.

Hi Timarr, that's very true, largely as I recall they were the ETF Securities Family that trade here in the UK, that issue has since been resolved, but it does highlight a point that you should always know what you are investing in. I don't trade those so I haven't looked at their structure yet, but it almost sounds like they are actually ETN's these are often falsely referred to as ETF's and are essentially a debt instrument issued by a provider and expose you to credit risk of the issuer. ETN's have the advantage of very accurate tracking of an underlying index but particularly in these times pose an added risk, I would personally advise people to try and find a fund rather than a note until after this crisis passes, or take a very close look at the issuer, and underwriter.

timarr wrote: »

Most share based ETF's will track some index or other and the label "index tracker" tends to make people feel that these are inherently safe (or at least as safe as possible in the risk ridden world of stocks). As ever, though, the investment industry can't leave a good thing alone so now it's inventing new indices to track against. This can be useful if you know what you're doing in order to get specific sector exposure, but you still need to be careful.

Understanding how the underlying indices are managed is important. Take the Corporate Bond ETF from iShares (SLXX). This, even now, is heavily based on the corporate bonds issued by banks and other financials. So what might seem to be a simple play on corporate bonds recovering before the stockmarket does (historically they do) is actually a bit of a gamble on government intervention. The underlying index here is adjusted quarterly so the next update is due next week.

Sticking to straightforward broad based index tracking ETF's like the iShares 250 is fine, but some of the other stuff is an accident waiting to happen.

timarr

Again good point to make, but provided you are prepared to do the homework then you can mitigate a lot of the risk. As I said in my original post, this area is for the slightly more adventurous, for those who need hand holding they would possibly be much safer staying with unit trusts etc