Educational articles

How Are Electronic Traded Funds (ETFs) Created?

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The creation of ETFs (Exchange-Traded Funds) involves a behind-the-scenes process known as the “creation and redemption mechanism” — a unique system that helps keep ETF prices aligned with the value of their underlying assets. The ETF Creation Process 1.ETF Issuer Designs the ETF A company like Vanguard, BlackRock (iShares), or State Street (SPDR) creates an ETF. The issuer defines: The index or assets it will track (e.g., ASX200, gold, tech stocks) The fund structure, rules, and expense ratio But the …

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What Is Sector Rotation?

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Definition: Sector rotation is the strategic movement of capital from one sector of the economy to another in order to take advantage of different phases of the business cycle and market conditions. Investors “rotate” into sectors they expect to outperform and out of those likely to underperform in the near future. Example: When the economy is growing, investors might rotate into technology or consumer discretionary stocks. When recession fears grow, they may rotate into utilities, healthcare, or consumer staples, which …

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What Is a Trailing Stop?

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A trailing stop is a type of stop-loss order that automatically adjusts as the price of an asset moves in your favour. It is designed to lock in profits or limit potential losses without requiring constant attention to market movements. Unlike a standard stop-loss, which is placed at a fixed price and does not change, a trailing stop “trails” the current market price by a specified distance (either a fixed dollar amount or a percentage). This means that if the …

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Which is better for total return, income or growth stocks?

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Investors looking to fund their living expenses through their share portfolio typically select stocks which are high yielding to provide them with income. However, what we have identified over the years is that high yielding stocks have not perform well in the stock market and therefore have not created significant capital appreciation for their investors. Companies which typically pay large dividends are usually blue-chip mature companies. As the growth phases of these companies are over, they do not need the …

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How does the overall market influence individual stocks?

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How does the overall market influence individual stocks? The performance of the overall market has a strong influence on individual stocks because markets are interconnected systems driven by broad investor sentiment, economic forces, and institutional behaviour. Even if an individual company is doing well, its stock may still fall (or rise) just because the overall market is falling (or rising). Here’s a breakdown of why that happens: 1.Market-Wide Factors Affect All Stocks Certain forces affect all companies, regardless of their …

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