Steadfast Finances10 Off the Beaten Path ETFs That Everyday Investors (Probably) Haven't Heard About - Steadfast Finances

10 Off the Beaten Path ETFs That Everyday Investors (Probably) Haven’t Heard About

Filed in 20s , Dividend Investing , ETFs , Index Funds , Investing 101 1 comments

leaf-on-panel-oregon-dot-solar-panel-solar-cellHave you noticed that everyone seems more interested in the esoteric, out of the ordinary types of investments these days?

I have.

Some people might want to buy gold because they’re caught up in the fear trade, or others might want to buy raw commodities like oil or natural gas because they’re a dwindling resource.

An entirely different group might want to diversify their retirement accounts as much as possible with the convenience of buying just one or two ETFs.

And Wall Street has paid attention to your wants and desires when it comes to what you want to buy.  If you can think it up, Wall Street probably has an ETF packaged up and ready for your buy orders.  Problem is, unless you follow Wall Street on a daily basis, you probably missed some of the really good ones.

Therefore, I decided to make a Top 10 List of the best ETFs (in my opinion) currently trading on the U.S. Stock Exchanges that you probably don’t know about.

Top 10 ETFs You Don’t Know

  1. U.S. Gasoline Fund (NYSE: UGA).  Just as the name implies, the UGA tracks the percentage change in the gas prices that we see at the gas pump.  Most people believe that crude oil directly impacts gas prices at the pump.  That’s a half truth – they influence it, but is not it’s master.  So if you have ever wanted an easy way to invest in rising gas prices, this is one way to go about it.
  2. iShares S&P Global Clean Energy Index (Nasdaq: ICLN).   If you’re a believer that clean, sustainable energy is the way of the future, then this ETF for you.  The big plus to this ETF is that you can easily invest in foreign companies not traded on U.S. stock exchanges while simulateously buying multiple solar, wind and other alternative energy companies.
  3. PowerShares DB Agriculture Fund (NYSE: DBA).  If you’re interested in owning basic agricultural commodities (corn, soybeans, sugar, wheat), this is the ETF for you.  The DBA is setup to mimic the performance of the basic commodity agriculture sector, and became very popular during the “corn based ethanol” debate.
  4. PowerShares Water Resources (NYSE: PHO).  It’s my suspicion (like many others) that water will one day be more valuable than oil.  This ETF holds a broad mix of industrial, information technology and utility companies poised for gains if you believe water is a valued resource or President Obama’s infrastructure rebuild projects will benefit this sector.
  5. Financial Select Sector SPDR (NYSE: XLF). The XLF is probably one of the most widely traded and frequently referenced ETFs on the market today considering the fallout in the financial sector.  This ETF has everything from big banks like Bank of America and JP Morgan to insurance companies like MetLife.  It is an excellent way of buying all of the financial sector if you feel the financial sector will recover as the economic outlook becomes less grim.
  6. Market Vectors Agribusiness ETF (NYSE: MOO).  Last I checked, we all need to eat and there are a few select companies that provide a large percentage of the basic ingredients to boost food production (fertilizer, seeds, equipment) are included in this sector based ETF.  Some companies in this ETF aren’t very popular for their business practices (e.g. Monsanto and the genetically modified foods debate), but if ethics aren’t a hindrance for you, then it’s worth a look.
  7. SPDR S&P 500 Dividend ETF (NYSE: SDY).  Also known as the S&P 500 Dividend Aristocrats ETF, the SDY focuses on high yield dividend paying companies that have consistently increased their dividends over the last 25 years.  If you’re a passive income investor who loves getting a consistent payout every quarter while having exposure to the stock market, this is one of the better ETFs to consider.
  8. iShares U.S. Preferred Stock Index ETF (NYSE: PFF).  Preferred shares are probably one of Wall Street’s best kept secrets considering they offer such unique benefits.  They’re not nearly as volatile and it’s fairly common for preferred stocks to pay twice the dividend as common stocks.  The PFF also has the unique feature of being an index fund because it owns preferred stock in every S&P 500 company that offers preferred shares.
  9. Vanguard REIT Index ETF (NYSE: VNQ).  One of the best selling points of investing in REITs (Real Estate Investment Trusts) is that you get all of the benefits of owning real estate without going through the mortgage process, you don’t have to deal with your tenants, and you can sell the property with two clicks of a mouse.  The VNQ is actually an index fund so you get the diversification and a dividend yield around twice that of the average S&P 500 dividend paying stock.
  10. Vanguard Emerging Markets Stock ETF (NYSE: VWO). True to form, Vanguard provides an all inclusive, low cost investment vehicle to invest in the BRIC countries (Brazil, Russia, India, China), and many other countries with a single ETF.  So you can own telecom companies in Mexico, electronic manufacturers in Korea, and drug companies in Israel by buying one simple ETF.

Obviously, each ETF presents a significant amount of risk since the majority of them are sector based ETFs and as we all know — risk is a double edged sword.  Meaning, it can slice up whatever you’re swinging at, but if you’re not careful, you can also chop off something of your own.

Also, ETFs bring management fees (e.g. individual expense ratios) with them.  You didn’t expect to get 50 stocks grouped into one easily tradable stock for free did you?  Some are more expensive than others, and you can easily check the expense ratios by checking the ETF’s Yahoo Finance “profile” page (example: the UGA ETF here) or by reading the ETF’s prospectus.

Got any ETFs that you consider “must haves”?  Please leave a comment below and we’ll see if they can bump one of my Top 10 from the list.

Attribution License by OregonDOT

Disclaimer: I do not own any of the ETFs in this article at the time of publishing.

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Posted by CJ   @   27 May 2009 1 comments
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May 30, 2009
3:06 pm
#1 Matt SF :

Testing gravatar plugin #1

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