ETFs: trade like a hedge fund with Pepperstone

ETF’s (Exchange-Traded Funds) allow investors the ability to track a benchmark at incredibly cheap rates. However, for those with a more active approach, ETFs importantly significantly increase a trader’s ability to capture trends playing out across markets, perhaps through a market thematic – such as cybersecurity, a basket of growth, value or momentum, or clean energy stocks. They open a new world of trading opportunity.

ETFs have never been more popular, attracting a record $500b of new capital this year and this trend only looks set to continue. Given the incredible popularity of ETFs and amid a push to offer multi-asset opportunity (we've recently increased our pool of US and global equity CFDs to close to 1000 stocks), Pepperstone is now rolling out over 100 ETFs. These offer traders the ability to express some of the clearest and most compelling themes in the market right now and throughout 2021. This list can and will grow, so if there is an ETF you want to trade just reach out.

For traders, the ability to see a current or emerging theme that is (or could be) dominating the narrative, you can express it as one that Pepperstone now truly facilitates. ETFs offer an often-cleaner vehicle to express a trading view, rather than through a currency or commodity which may have many opposing forces affecting price at once.

Given our ETFs offering is a CFD (Contract-for-Difference), you’re only expressing a view on the underlying price rather than actually owning the underlying – therefore, you can trade our range of ETFs long or short, and potentially profit from any swings in price. Think US bonds are going lower (yields higher)? Short the TLT ETF, an ETF that traditionally offers only upside in price for those investing in the underlying.

The appeal of ETF CFDs

• Trade movement, core and interesting themes, and often hard to access markets as an ETF (CFD)
• Rather than trading one specific stock, ETFs offer diversification to a market theme, as well as making that theme incredibly intuitive
• Trade ETFs long or short – potentially profiting from any direction of the ETF
• Trade on leverage – place a percentage of the notional USD face-value down, make your capital go further
• Cost-effective – 2c a share allows for traders to be highly active in their trading approach
• The most diverse range of effective risk management, and technical tools MT5 facilitates
• Automate potential trading strategies
• Trade some of the most liquid ETFs in the pre-and post-market session – react real-time.

Our range of ETFs will appeal to traders who see a market theme, vibe or change in sentiment and want to express it directly – long or short and with leverage – meaning, they place a percentage of the full-face value down. They will appeal to active traders, perhaps not those who buy and hold for passive purposes with the aim to achieve benchmark returns – but, for traders who want to want to take a more active stance to grow the capital in their account.

The appeal by trading style

By way of trading style, ETFs really appeal to thematic and special situation traders. However, momentum, trend-following and mean reversion traders will also want to put these on their watch list. Scalpers will likely prefer our traditional spread-based products (for example, XAUUSD and the major FX pairs) due to tight spreads and the 24/5-hour nature of the market, but at 2c a share (no minimum commission) and deep liquidity, equity CFDs scalpers can find attractions here.

Price discovery is core to trading, but so is the ability to trade your way, whenever you want to express a view. While most find it impossible to replicate the sophistication of a hedge fund, we can loosely replicate the dynamics and increase our edge.

By way of example - Themes our current ETF rollout captures

• US bonds are rallying – what is the message we’re hearing and how much further can price go? - Trade the IEF (7-10 YR US Treasury bond) or TLT (20yr+ US treasury bond) ETF 
• Like or loath US or global financials and want diversification? - Trade the KBE (S&P US Bank ETF) or the IXG (iShares Global financial ETF) 
• Want to trade a basket of gold stocks rather than our gold CFDs? - Trade the GDX (gold miners ETF) or GDXJ (Vector Junior gold miners) 
• An energy revolution? Want exposure to clean energy, lithium, or uranium? - Trade ICLN (iShares clean energy ETF), LIT (Global X Lithium ETF), URA (Global X Uranium) 
• Hacking risk is on the rise - Think cybersecurity will only become more important for business? - Trade CIBR (First Trust Nasdaq Cybersecurity ETF) 
• Get exposure to Emerging Market or more boutique equity indices? - Trade markets like the EEM (iShares MSCI Emerging Markets ETF), INDY (India 50 ETF) or EWY (MSCI South Korea ETF) 
• Think there is downside to high growth ‘innovation’ equities? - Trade ARKK (ARK ETF Trust - ARK Innovation ETF) 
• Want to express a view on US homebuilders? - Trade the XHF (SPDR S&P Homebuilders ETF) long or short.

Trade your way and increase the opportunity with Pepperstone’s ETFs and multi-asset solution.