Advisors use ETFs to accomplish investment objectives in many ways. Some include:Current income: Advisors can use ETNs to provide current income with a lower level of credit risk than individual bonds. Currency hedging: Advisors who do not wish to directly engage in foreign currency speculation can purchase ETFs that provide a hedge against fluctuations in currency prices or foreign interest rates. Market hedging: Advisors can hedge their clients’ positions against possible market or index downturns with ETFs that move inversely to specific market indices. Trading options: For advisors who do wish to use derivatives, trading options on ETFs can be a good way to hedge a client’s position or provide quick gains. Sector rotation: Advisors can move their clients from one sector to another much more easily with ETFs than traditional funds with 3-day trade settlements. Style investing: There are ETFs for every sector of the market including large-cap growth, small-cap blend, short duration bonds and more.
