Borrowing to boost returns: too much of a gamble for investors?

Borrowed capital can amplify investment returns. If you invest £1,000 and see a 10% return, you will receive £100 in profit. If you leverage your investment by borrowing £9,000 to add to your existing £1,000, you will have £10,000 to invest and that same 10% return will yield £1,000.

However, because 90% of what you have invested is borrowed, the return on your initial £1,000 is 100%. Leveraging has enabled you to double your money (excluding borrowing costs).

Do smart beta ETFs offer investors protection?

As I write, much of Europe is house-bound and the global economy is still reeling from the unprecedented impact of the Covid-19 virus and plummeting oil prices. The implications for the global economy are far from clear. That said, the lessons learned from previous crises are very clear: sit tight and wait it out: the storm will pass.

Bearish investors jump into short ETFs – that may not be a good idea

After their sharp plunges in March, markets around the world spent much of April in recovery mode. To the surprise of many, the FTSE 100 index recently broke the 6000 point mark. That put the index 22% up from the bottom it reached at the end of March, technically entering bull market territory. It was a similar story for the S&P 500 index.

World’s largest oil fund rule change shows how no ETF is truly passive

The world’s most popular oil ETF, USO, has announced a drastic shake up in regard to how it invests, blurring the line between active and passive management.

The ETF has announced it will sell all of its June futures contracts, which account for about 20% of its $3.6bn portfolio, over the next few days. It will replace these with contracts dating between July 2020 and 2021.

Is my ETF run by a robot?

The growing popularity of exchange traded funds (ETFs) challenges traditional views about investing. One of these refers to the role that people play in the fund management process. You buy an ETF for its low cost, its flexibility and transparency, the easy access it provides to all sorts of markets, perhaps even for the reputation of the company that provides it – but certainly not because you’re awestruck by the publicised star status of the person managing it.

- How to invest: ETFs

Covid-19: the ultimate black swan event

Rarity, extreme impact, and retrospective predictability. Those are the three characteristics of a black swan event, according to Nassim Nicholas Taleb, the theorist who coined the term. Black swans come out of nowhere to derail financial markets – they are so-called because of an old saying that black swans did not exist, until one appeared to prove otherwise. But what can we learn from these events, and what can history tell us about how markets recover?

ETF portfolio: global markets feel coronavirus fear

These have not been a good three months for our global value ETF portfolio, which fell in value by 6.9% between 2 December and 2 March. The total return since purchase at the start of September 2019 is also down, by a disappointing 7.7%.

ETFs move to discounts: is big trouble brewing in ETF land?

In a sign of the extreme pressures building up inside the financial system, the Vanguard Total Bond Market Index Fund ETF (BND) has moved to an unprecedented discount to its net asset value.

On 12 March, BND traded at a discount of 6.2%. This is unusual because exchange traded funds (ETFs) are replicating an underlying asset or market and therefore their prices will typically be closely aligned to their net asset value. Vanguard’s BND fund at its height held assets under management of $55 billion.

ETF analysis: three reasons why you need a dividend ETF

This piece was written before the impact of the coronavirus on global markets.

Investors seeking capital preservation, steady income and low costs would do well to have a dividend exchange traded fund in their portfolio. While it is tempting to chase the highest yields, it is wise to keep an eye on the long term.

Successful income investing rests on finding a balance between achieving an optimal income stream and protecting capital over the long term.

Investing in water: how ETF investors can tap into returns

In 2019, Legal & General launched the first new water-themed ETF to be listed on the London Stock Exchange for 10 years.This new entrant undercuts its rivals on fees, but how else does it differ? Before we explore the differences, it is worth reminding ourselves of the thesis behind an investment in water.