Insider Monkey

10 Weirdest, Unusual ETFs You Can Buy

Fahad Saleem
7 min read

In This Article:

In this article, we will take a look at the 10 weirdest, unusual ETFs you can buy. To see more such ETFs, go directly to 5 Weirdest, Unusual ETFs You Can Buy.

The inflation wave that started in 2022 is still reverberating throughout the globe and has affected almost every facet of the global economy. Inflation, rising interest rates and the subsequent decline in stocks markets have spooked individual investors with limited budgets. Investing in stock market has always been tricky. But the latest backdrop has redoubled the importance of portfolio diversification. According to a report by BlackRock, as of the end of 2022, 46% of individual stocks lost money over the last five years. On the other hand, just 1% of “diversified investments” lost money during the same period. Individual stocks are always prone to more losses. Short-term waves like AI-led rally of 2023 should not lure you into believing that you can easily put your money into some individual stocks and enjoy huge returns. Had it been the case, expert stock pickers and money managers would not have been posting huge losses. The BlackRock report said that investing in “many stocks” provide a downside protection that is not possible in investing in a limited number of individual stocks.

Investing in different stock markets has been one of the tools to diversify investment portfolios. A Vanguard report mentions some interesting data points showing how investing in global markets to diversify one’s portfolio has been an efficient strategy to diversify portfolios instead of putting all your money into the stocks of a single country. The report said that the US stock market’s volatility has been the lowest but global markets, which aggregate all countries, beat even the US when it comes to low volatility.

ETFs provide an efficient way to hedge against losses and diversify your portfolios. Unless you are Warren Buffett or Mark Cuban (who are famous for being against diversification), diversification is your necessity since in financial markets a beginner or amateur (and in many cases, professional) investor cannot say with 100% certainty that their bets would pay off. ETFs provide you a way to have exposure to many stocks in a tax-efficient way along with having some downside protection. And ETFs have been attracting investors over the past few years.

Investing Advice from an Expert: "Don't Get Fancy"

A Bloomberg report published in August 2021 said that most of the money invested in US ETFs went to U.S. large-cap funds. Investors poured a whopping $1.7 trillion to U.S. stock ETFs and just $440 billion to foreign ones, according to Bloomberg Intelligence. The report at the time mentioned that most of the returns posted by the US stock market were coming from just a handful of US large-cap stocks like Apple, Microsoft, Tesla, etc. Ironically that is true today as well. The Bloomberg report also quoted Marc Andreessen, the famous investor who’s a master at spotting profitable startups of the future. Even Andreessen’s advice for average investors is to invest in an index fund tracking S&P 500 and to don’t get “fancy.” Time and again successful investors have reiterated a golden investing principle: not losing money and hedging against losses should be the top priority when you are investing the stock market. There are more losers in the market than winners so you ought to be careful where you put your money. That’s why ETFs have attracted millions of young Americans over the past few years.

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