Comparison of the three major US stock index ETFs is simple. You need to know which of the top three is your best choice. Each one of them offers a different combination of advantages and disadvantages that will be of particular interest to you. Here are some key things to keep in mind as you compare NASDAQ, the Dow Jones Industrial Average and the S&P 500.
NASDAQ Composite Index. This is an all currency trade-able stock index. It tracks global markets and this index is used by investors to buy and sell shares of companies that make up the composite. The major businesses included in the mix include oil and gas, blue chips, financial services and pharmaceuticals. There are also industry sector sub-categories within this index including technology and information.
Dow Jones Industrial Average. This is an all industry trade-able index where stocks of the largest companies in the United States are listed. Business sectors are separated out into two parts including the industrial sector which includes the most important manufacturing industries. The Financial Service and Technology sectors include the most important of consumer goods companies.
The S&P 500. This is a general stock market index that tracks trading stocks of large companies. It includes major companies from across the US. It also includes some mid-cap and small cap stocks. It is comprised of 100+ stocks that have traded on major exchanges. Unlike the NASDAQ Composite, the S&P 500 is not traded on traditional exchanges like the NYSE or NASDAQ but instead is traded over the counter (OTC).
The Nasdaq. Also known as the National Association of Securities Dealers (NASD) is the oldest and largest stock exchange in the US. It is similar to the NYSE with a few variations including being the largest over the counter market. Over the counter trades are those between buyers and sellers instead of those between brokers. It is also the third largest market in the world.
The Energy Futures Index. This is an energy index that tracks energy related stocks traded in the US market. It has major companies that directly deal with the oil and gas industry. It is closely correlated to the US energy market. It has a high volume of daily trade and is considered to be a very reliable market.
The Blue Chip Stock Index. This is a stock index that invests in company insiders and bonds. Blue chip stocks are valued at their prices as determined by professional analysts. Unlike the other two major stock index ETFs, it is not traded on major exchanges.
The Corn Exchange and Cotton Exchange. This is a specialized stock index ETF which invests in the corn market. It is closely correlated to the futures and options markets. It is considered to be a strong alternative to the US equity and commodities markets. It is important to remember that the trading of this market is done via the futures market.
Another very important US stock index ETF is the Energy ETF. It is very closely correlated to the oil and gas market. Like the others, it is also traded on the major exchanges like the NASDAQ. This is considered to be a strong alternative to the US equity and commodities markets.
Another alternative is the Market Risk Index. This is another stock index alternative that is closely correlated to the Dow Jones Industrial Average. It is a volatile type of stock index and is traded on the OTCBB and Pink Sheet stock exchanges. It is important to note that this type of stock index does not trade on major exchanges. It is important to look carefully at the details in order to determine if this is a good choice for your portfolio.
The fourth alternative is the Dividend Reinvestment Screener. This is another stock index comparison of the three major US stock index ETFs. This is primarily based on performance of the company rather than its price. However, the analysis tends to show a strong gain from the dividends reinvested. In addition, you will receive strong yield on your reinvested earnings.
The comparison of the three major US stock index ETFs can provide you with an effective way to choose the right type of investment for your portfolio. There are often mutual fund alternatives that include these types of ETFs. You may be able to find a portfolio that suits your needs and is still very cost effective. In addition, with the proper research, you may even be able to find tax efficient ETFs as well.
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