Types of ETFs

Since the launch of the first domestic ETF by the American Stock Exchange in 1993 (the S&P 500 SPDR), growing popularity has led to the launch of more than 300 different ETFs today. While you are probably familiar with the most popular ETFs such as QQQQ (Nasdaq-100 Index) or SPY (S&P 500 Index), a multitude of both trading and investing opportunities for nearly any scenario can easily be found within the hundreds of various ETF offerings. The bad news, however, is that sifting through the numerous types and families of ETFs without a reference guide is a tedious and confusing process. Fortunately, we have already done this hard work and compiled the results in the Morpheus ETF Roundup, a FREE reference guide that groups all of the ETFs by sector and sub-sector and allows you to easily compare the various fund families that offer a product within each group.

To receive your FREE copy of the Morpheus ETF Roundup, simply right-click on this link, then select "Save Target As..." to download the file to your desktop. You will need Adobe Acrobat Reader in order to open the file, but your computer probably already has that installed. If not, you can download the Acrobat Reader software from adobe.com. Following is a summary of the ETF families included in the ETF Roundup guide:

• iShares - With more than 100 different exchange traded funds ranging from broad-based to commodities, the iShares family has the most diverse offering of ETFs. Issued by Barclays Global Investors, iShares consist of the following types of ETFs: broad-based, international, industry sector, fixed-income (bonds), and commodities.


• HOLDRS - Issued by Merrill Lynch, HOLDRS is an acronym that stands for HOLding Company Depositary ReceiptS (pronounced "holders"). Opposite of the PowerShares ETFs, the HOLDRS only change their underlying components and weightings when a company is acquired. This has had the unfortunate result over the years of certain companies within each sector developing a very high percentage weighting within each HOLDR. It is also important to note that the HOLDRS can only be traded in increments of 100 shares. Nevertheless, the HOLDRS remain one of the most popular families of ETFs on the market because they were also one of the first.


• PowerShares - Although a relatively newcomer to the ETF scene, we really like the PowerShares family of exchange traded funds because of the unique way in which they are comprised. Unlike many other ETF families in which the underlying stocks rarely change, the PowerShares exchange traded funds use "dynamic indexing" in order to constantly search out the best performing stocks within each index. Based on a sophisticated quantitative selection process, "dynamic indexing" enables the underlying securities to change on a quarterly basis. PowerShares offers ETFs in the broad market, industry sector, and international.


• VIPERs - Issued by Vanguard, better known for their diverse selection of traditional mutual funds, the VIPERs offer a well-rounded set of ETFs ranging from broad-based to industry sectors. There are also a few international ETFs that primarily cover whole continents. There are presently more than 20 different ETFs available for trading and investing.


• SPDRs - SPDRS (pronounced "spiders") is an acronym for Standard & Poor's Depositary Receipts. There are more than 10 different SPDRS issued by State Street Securities or PDR Services, LLC. Two of the SPDRS track broad-based market indexes, while the rest are comprised of specific market sectors or industries (known as Select Sector SPDRS). The most popular is the S&P 500 Index Tracking Stock (SPY), which trades an average daily volume of over 60 million shares!


• StreetTRACKS - Perhaps the most well-known ETF in the StreetTRACKs family is the Gold Trust (GLD), which mirrors the price of one ounce of spot gold. It was the first exchange traded fund to track a commodity, but several more from other fund families have since followed. The StreetTRACKs family also offers ETFs in the broad-based market segments, as well as a handful of industry sectors.


• First Trust - A relative newcomer to the scene, there are presently only a handful of ETFs in this family, but we included them nevertheless. One of the more interesting funds in this family is the IPOX-100 Index Fund (FPX), which is tagged to the performance of a wide variety of initial public offerings (IPOs).


• Rydex - This is another family with a relatively limited offering of ETFs focused on broad-based market segments such as small, mid, and large cap, as well as growth and value-specific funds.