Best way to trade an index?

[ruethewhirl]

Suppose you decide that, for example, the turkish stock exchange
index looks very bullish and you want to take a position on it, for
say 6 months, one year, what is the best way to do that?

I notice that, for example, CFDs when used to trade indices are
meant to be held for short periods, and Investment trusts that are
meant to be held for longer periods are usually very nebulous -
they have names like:

Eastern European Emerging Opportunities

- and invest in a whole lot of markets - they never seem to focus
on one particular market.

Any thoughts / advice appreciated.

 

[tomorton]

You could spreadbet the index of your choice, though exotic stuff like the Turkish index might be hard to find listed - you could always phone and ask the SB firm to quote you individually.

On book SBs the furthest out I can currently go with my SB firm is 6 months, but I can close and open new positions as many times as I like between now and then. There is no CGT penalty to crystallising SB profits of course, and if the spread is reasonably narrow the costs of these in and out trips would not be too great.

You mght even get an open-ended rolling SB quote, though costs and risk might be considered greater.

With some indices there are i-Shares avalable which track the index to about 99% accuracy. If you're bullish you could simply buy the i-Shares, like ordinary shares though the trading costs are lower and there are no management fees as this is not a fund, it is a shareholding. You would also get the average dividend of the constituents of the index in question. There is no time limit to holding these.

Best wishes.

 

[Mattybuoy]

For that sort of time period ETFs (iShares in the UK) are IMHO the best option. They are only available for more mainstream markets though at the moment. Hopefully the coverage will expand over time.

Country-specific non-tracking funds are OK if you can find them. Investment trusts are more likely to cover the more obscure regions e.g. Turkey but then you have the discount issue to worry about. There may be liquidity and clearing issues too.

 

[charliechan]

i agree etf's are the best bet. as they are exchange traded (amex still??) there is less chance of getting stiffed