| Most
ETFs do not have LEAPs available. Here
is some commentary and recommendations
for those that do.
The “best” LEAP ETF is IWN,
the small-cap value ETF. Based upon the
Fama-French small value premium, the
underlying should return about 14% to
18%. However, it has a relatively high
bid-ask spread, which means that it should
be only rolled over once a year and isn’t
suitable for any shorter-term options.
Other good ETFs:
EFA: Foreign Value, based on the MSCI
EFA
MDY: Midcap companies
IWM: Russell 2000
Not so good ETFs:
SPY, OEF: Large caps are overrated.
Sector ETFs:
XLF, XLV, XLB, XLU, XLP, XLK, XLY, XLE
These are good if you want to reduce
volatility by building a balanced sector
portfolio.
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