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Exchange Traded Funds
A large part of
Summit Trust's Asset Management
Program deals with investing in Exchange Traded Funds (ETFs). ETFs are
funds that track an index or sector. An ETF trades like a stock on the
major exchanges. So this immediately gives you the best of both the
stock and mutual fund characteristics. In addition, ETFs offer
investors several advantages that give you more choice, more control,
and more protection in your portfolio.
Investment Advice
regarding the Exchange Traded Funds portfolios is provided to Summit
Trust Company by Brown Investment Advisors, Inc., a Pennsylvania
licensed registered investment advisor.
Some of the
other advantages to having ETFs in your portfolio include:
- Transaction Ease: Mutual
funds can only be bought
or sold at the closing price every day. And most funds impose fees for
anyone who holds them for less than six months. In contrast, ETFs trade
like stocks on the major exchanges, predominantly the AMEX and NYSE,
and you can trade them whenever you like, and as often as you wish.
- Transparency: ETF owners
know exactly what stocks
or underlying assets they're holding, as opposed to mutual funds, which
typically only disclose their top 10 holdings.
- Investing in Exchange
Traded Funds means you can
buy actual commodities
such as oil and gold without ever taking delivery of oil, or carrying
an ounce of gold. Or you can buy foreign currencies without ever having
to leave the U.S. So if the price of oil, gold, or the currency that is
owned by your ETF you
own goes up, so too will your ETF.
- If you're a longer-term investor or
position
trader, Exchange Traded
Funds are a very strong alternative to mutual funds for most long-term
investors. With lower tax disadvantages (capital gains are limited
unless
you sell) and no short-holding redemptions penalties, ETFs are
increasingly prevalent in more long-term portfolios.
Investing
internationally has become a large trend, especially since a
lot of the foreign markets are outperforming the U.S. markets and the
U.S.
dollar has fallen dramatically against a lot of major currencies.
Two of the chief
reasons why people invest internationally are:
Diversification
-- spreading your investment risk among foreign
companies and markets that are different than the U.S. economy, and
Growth -- taking
advantage of the potential for growth in some
foreign economies, particularly in emerging markets.
In addition, today
more than half of the total global
stock-market
capitalization happens outside the U.S. If the domestic markets fail,
then foreign markets can provide other sources of return. This makes
International ETFs especially useful if you're trying to gain exposure
to foreign markets that would otherwise be costly or prohibitive to
access on your own.
In order to take
advantage of favorable international trading and the declining U.S.
Dollar, Summit Trust offers six ETF portfolios to choose
from.
The
Six Portfolios are:
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Fixed
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100%
Non-Equity
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Conservative
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20%
International Equities & 80% Non-Equity
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Moderate
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40%
Inernational Equities & 60% Non-Equity
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Balanced
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60%
International Equities & 40% Non-Equity
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Agressive
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80%
International Equities & 20% Non-Equity
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Equity
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100%
International Equities
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In Addition, our
current
ETF Investor Suitability Guide can be used
to help you to determine which of the six different portfolios are
appropriate
for you.
Learn more about
the STAMP Exchange Traded Funds:
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