Indonesia ETF, A Leveraged ETF

In the world of trade and stock exchange it is quite common to hear the term exchange-traded funds or ETFs. The reason for this is that ETF functions basically the same as with the traditional stocks. All of which has its own trade value and securities to ensure quality trading. An ETF is a bundled stock that is usually made up of more than a single line of trade. Contracts, futures and even agricultural products as well as oil may often times be bundled together as a form of ETF.

There are several ETF that utilizes financial derivatives to amplify their returns. Some use debts to further increase the returns of an underlying index of the trade. These are usually called leveraged ETF. They are readily available in most global indexes of stock exchange such as Nasdaq-100 and Dow Jones. Leveraged ETF are made to keep constant amount of leverage during a single trade day using a ratio of 2:1 or more.

By using a leveraged ETF, the annual returns of an index will significantly follow the daily changes in a single trading day. Leveraged ETF is more stable than the latter and will five a better approximation of a given inflation.

Indonesia ETF such as IDX is a steady competitor in the war of the ETF. Investors have currently piled up and increased their number on several emerging economies. The contest for better trade potentials have reached its peak on larger economies and most investors are eying smaller and more undeveloped countries for trade. Africa and smaller Asian countries have been targets for potential investors compared to the middle East that is having several problems due to bad governance and oil exportation. Indonesia is a most likely a top candidate due to its stable economy and self reliance on oil and agricultural products.

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