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Anonymous

26 Aug 2021

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General Investing

How do we determine the buy price of an ETF?

For stocks we can look at P/E, compare with industry etc. , but how do we determine a "good" price for ETF?

Discussion (2)

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When buying ETF, specifically S&P, You are aiming for market average return.

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Inorder to get an average return, you need to continously buy in regardless of market condition, DCA, else you wont get that avg return.

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But you may make use of sector rotation strategy, using sector ETFs to increase your gain.

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However, S&P should still be your core. Because you will outperform and underperform the market over the years. With S&P as your major holding, even when you underperform, u would deviate too much from the average.

Humble contrarian view: by not trying to determine a good price at all. My view is that ETFs should not be bought dependent on any price limits or value parameters.

The safest bet (f ex for stock etfs) seems a globally diversified ETF, like ISAC or SWRD, price is unimportant. When the ETF is selected it should be DCA'ed in.

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The important parameters for selecting etfs howevee are: well considered allocation (countries, sectors), large AUM, lowest TER, physical replication, if possible no securities lending, UCITS types where possible.

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https://seedly.sg/posts/what-is-your-general-in...

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https://seedly.sg/posts/what-is-your-general-in...

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