ETFs are designed to decrease risks by offering investors access to a
group of stocks. However, the use of highly specialized indexes by ETFs
can increase exposure to the riskiest sectors and lead to large losses
when trends reverse. To find the right balance, we look for ETFs that
have diversified holdings and can benefit from several investment
trends.
Heading into 2014, we see several important economic
themes developing that should have a large impact on stocks. In the
U.S., robust retail spending in November and an upward revision to
October's data has led to hopes that consumer spending will pick up in
2014. Since consumer spending accounts for about two-thirds of GDP, it
is unlikely we'll experience a recession if this trend continues.
Recent
data also indicates that Europe will finally be joining the U.S.
economy in an expansion. And with Asian economies expected to expand
too, this could be the first synchronized global expansion since at
least 2008, when the credit market crisis sparked deep economic declines
around the world. (more)
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