Exploring ETFs: A Comprehensive Guide to Exchange-Traded Funds • Letter 104

Hedgehog Admin -

Happy Thursday, it's Colton here; CTO and registered rep at Hedgehog.app, a robo-adviser for digital assets. With a combined focus on risk management principles and growth potential, Hedgehog brings traditional financial best practices to the crypto space.

Last week, we announced the official launch of our mobile application available on Google Play and the App Store. We are very grateful for some of the great articles last week from CoinDesk, Gemini Blog, Product Hunt, Hacker News, Launchcaster, Crowdfund Insider, and Crypto Times.

Exchange-Traded Funds

This week is all about Exchange-Traded Funds (ETFs). With a rash of new applications to offer spot Bitcoin ETFs, we thought it would be a good idea to make sure y'all are up to date on how these products work. ETFs have gained significant popularity in the world of investing, offering a diversified and flexible approach to portfolio management. Combining the benefits of mutual funds and stocks, ETFs have revolutionized the way investors access a wide range of assets and markets. In this article, we will delve into the world of ETFs, exploring their structure, advantages, and the various types available to investors.

An ETF is a type of investment fund that trades on stock exchanges, mirroring the performance of a specific index, sector, commodity, or asset class. Similar to mutual funds, ETFs pool investors' money to create a diversified portfolio. However, unlike mutual funds, ETF shares can be bought and sold throughout the trading day at market prices, just like individual stocks.

Key Advantages of ETFs:

  • Diversification: ETFs provide instant diversification by holding a basket of assets within a single fund. This diversification helps reduce individual stock or sector risk and offers exposure to a broad market or specific investment theme.
  • Liquidity: ETFs trade on stock exchanges, providing investors with the ability to buy or sell shares at any time during market hours. This liquidity feature ensures ease of execution and flexibility, allowing investors to quickly adjust their positions.
  • Transparency: ETFs disclose their holdings on a daily basis, allowing investors to know exactly what assets the fund holds. This transparency enables investors to make informed decisions based on the underlying holdings of the ETF.

Types of ETFs:

Broad Market ETFs: These ETFs track popular market indices like the S&P 500, providing investors with exposure to a wide range of stocks across different sectors.

Sector ETFs: Sector ETFs focus on specific industries or sectors, such as technology, healthcare, or energy. These ETFs enable investors to target specific segments of the market based on their investment strategies or preferences.

Commodity ETFs: Commodity ETFs track the performance of commodities like gold, oil, or agricultural products. These ETFs offer exposure to the price movements of physical commodities without the need for direct ownership.

Similar to these in the crypto space is the Stacks on the Hedgehog application. Clients are able to "buy the market" similar to ETFs, but you own the assets directly, and Hedgehog simply manages the assets on your behalf. These are the current Stacks to choose from:

  • Total Crypto: More than 85% of the entire crypto market cap
  • Satoshi: Bitcoin, where it all started
  • DeFi: Peer-to-peer financial services on the blockchain
  • ETH Network: Assets built with Ethereum
  • Layer One: Core networks powering the crypto ecosystem
  • Yield Farming: Tokens that pool staked funds to generate rewards

Quick Hits

MicroStrategy’s Bitcoin tally reaches over $4.5 billion in value. The average buy price is sitting around $29,668 per coin.

r/Cryptocurrency discusses on chain data showing 69% of Bitcoin’s supply not moving in over a year. Is this a testament to diamond hands or do people want to avoid selling at a loss?

Speaking of ETFs. Finance giant, Blackrock files for Bitcoin spot ETF. This filing prompted ARK to amend their ETF submission. Now resembling something closer to Blackrock.

Giveaway

Answer the question of the week for a chance to win three of these prizes:

  • insulated stainless steel water bottle with Hedgehog logo
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  • snazzy Hedgehog socks
  • cozy Hedgehog hoodie
  • comfy Hedgehog baseball tee

What's your favorite financial services provider? Reply to this email with your story and you'll be entered in the giveaway.

Keep hedging,
Colton