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FT Guide to Exchange Traded Funds and Index Funds, 2nd Edition by David Stevenson

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9

Active portfolios using ETFs

Most investors who use ETFs are happy to stick with a buy-and-hold philosophy – they are using ETFs to access certain asset classes over the long term. But a sizeable minority of investors also use ETFs in a much more active sense – they invest in a particular asset class to take a short-term view on its direction. That decision to actively time the direction of a market or sector forces them to use some form of defined methodology – many use the direction of a share’s market price in an attempt to gauge the ‘momentum’ of that stock. This methodology is commonly called technical analysis and is used by a great many investors to manage their ETF portfolios over the short term. Tarquin Coe and Mark Glowrey are ...

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