MMCP will be held in the Glenroyal Hotel Maynooth from Friday to Sunday October 3rd – 5th 2008.

Elite level 1 courses will be held in the Glenroyal Hotel Maynooth on Saturday and Sunday October 4th and 5th 2008.

Elite level 2 courses will be held in the Glenroyal Hotel Maynooth on Saturday and Sunday October 11th and 12th 2008.

To register for all courses contact 1800 367 693 or www.ticnireland.ie

National Ploughing Championships
Why not visit the Ticn stand at the National Ploughing Championship, which will be held in Cuffesgrange, County Kilkenny from the 23rd. to the 25th of September?

One of the first things people are taught at the MMCP is the meaning of an Index in the stock market which is a group of shares whose performance is tracked as a means of providing an indicator of how the overall market is performing. So in the performance of the 30 companies which make up the Dow Jones index we can say in general whether or not the market is going up or down over time. We teach people about the two other indexes of the NASDAQ 100 or the S and P 500 which are other indicators of how the market is performing.

Rather than trying to pick individual shares to invest in, people had the idea that it would be simpler to buy all the shares in the index. This would involve little work but would give them the return that the index provided. However, it would be very expensive to own the 500 shares in the S and P 500. Hence investment companies and fund managers created the idea of an Index fund. This is a fund, which consists of all the shares in the index and whose performance mirrors the performance of the index. These funds were run by investment companies and members of the public wishing to participate bought units in the fund from the company, which ran it. If they wished to get their money out of the fund, they simply sold their units back to the fund manager at the price calculated for the fund at the end of that particular day.

However, in 1993 State Street Global Advisors launched the first Exchange Traded Fund (ETF). An ETF is a security that tracks an index, just like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated every day like a mutual or investment fund does.

By owning an ETF, investors get the diversification of an index fund. In addition however, there is also the possibility of trading it like a share such as rolling it, or even selling it short, buying on margin, purchasing as little as one share and even on some ETFs selling covered calls. When buying and selling ETFs, investors must pay the same broker’s commission as they would  pay on any regular order to buy or sell stock.

One of the most widely known ETFs is called the Spider (SPDR), which tracks the S&P 500 index and trades under the ticker symbol SPY. This was the original ETF launched in 1993. From that beginning, the number of ETFs has grown so that now there are approximately 1200 ETFs in existence accounting for $800 billion in assets.

A company must set up the ETF and operate it and as can be expected, they will seek compensation for their efforts. Therefore there are some expenses taken out of the fund. These tend to be very small compared to traditional investment funds. However, they do lead to a difference between the performance of the ETF and the underlying index. For example, over the past 5 years the S and P 500 index has risen 10.62% whereas the ETF, which tracks it (SPY) is up only 10.56%. The expenses incurred in running the fund account for the difference between the two figures.

Exchange Traded Funds have expanded so that now they not only track particular indexes, but they also track the performance of individual sectors such as small, medium and large companies (such as the various Russell indexes or Wiltshire 5000 index) regions of the world (such as the EAFE index covering the economies of Europe, Australia and the Far East), ETFs for specific countries (such as Brazil, Russia, India or China), indexes for particular industries (commodities) or even specific niches within industries ( such as the Gold index which is a subset of the precious metals industry).

Such an enormous variety of indexes gives investors the opportunity to diversify their portfolios so that they can invest in growth regions or industries. They can also get exposure to them through ETFs without having to build up the company specific knowledge needed when investing in the stock market in company shares.

However, investors need to be aware that the more narrowly focused the ETF, the greater the likelihood of volatility arising. For example an index which tracks the performance of a particular country would fluctuate depending upon the fundamentals of the economy, the credit worthiness of the currency and the economic and social stability of the country. Similarly ETFs focused on specific niches can also be volatile. Therefore it is necessary to know what precisely the index is tracking and the underlying risks associated with it. As with stocks, those ETFs which do not attract a large volume of activity tend to have very large spreads between the bid and the ask price.

However, given that they trade like a share and their chart patterns can be analysed in the same way as those of a share, ETFs provide investors with great opportunities to diversify their buy and hold portfolio or to invest in growth industries. Traders also have the opportunity of applying advanced trading strategies such as Credit or Debit spreads to them. Ticn members really appreciate this as, the ETF referred as the Qs (ticker symbol QQQQ) which is the most widely traded ETF of them all, tracks the performance of the NASDAQ and allows graduates of the Elite 2 programme the opportunity to generate healthy returns through advanced strategies on a regular basis.