Are PowerShares Better Than Exchange Traded Funds?
I Think So… Traditional exchange traded funds are, as Dan described, single investments that allow you to hold an entire sector (like the energy sector, for example) in just one stock. Investors looking for information about exchange traded funds should know that ETFs are like a mutual fund, in that they hold a basket of stocks with a similar theme (energy stocks, for example). And they’re generally most like index funds, in the sense that they just hold a fixed portfolio of companies in that theme. Lastly, and importantly, exchange traded funds generally hold the stocks in proportion to the size each stock makes up in its sector. To me, this is where the problem comes in… Exxon and Chevron, for example, make up nearly half of the iShares Energy Sector exchange traded fund. So are you really holding a basket of stocks representative of the energy sector? NO… It just so happens that Exxon and Chevron are so huge, based on their market value, they’re the industry giants. So if you buy th
