singapore (PRWEB) August 20, 2011
Are you unfamiliar with a market but would like to begin investing in it in order to diversify your portfolio? It can be daunting at first to know how and where to start doing so, which is one reason why Phillip CFD launched the World Indices CFDs. Besides being the first and only stock broker to provide the Straits Times Index in Singapore, we increased our list of World Indices CFDs from six to eleven on 13th June 2011 by adding five new indices that cover Singapore, East Asia and the United States.
Just what is a World Indices CFD? It is a form of Contracts For Difference (CFD) that allows investors to track and trade the underlying index, although prices may differ from the actual index levels. For example, Phillip CFD clients can trade the Straits Times Index (STI) SGD5 CFD which tracks Singapore’s benchmark Straits Times Index; and the bid and ask prices are created with a spread of 6 points from the actual STI level. Besides the STI, clients can now also choose to trade the Singapore market through the Singapore Index SGD20 CFD, which tracks the Singapore MSCI Index.
So, why should one trade World Indices CFDs? Firstly, stock market indices are one of the measures of the market performance in each country and it is easy for an investor to familiarize oneself with them as they are regularly featured in the news. Therefore, as stated earlier, World Indices CFD is a useful product that allows investors easy access to an otherwise unfamiliar market without concern about clearing fees in the respective exchanges or the need to stock pick.
Secondly, indices such as the STI and the Nikkei 225 are baskets of blue-chip stocks listed on the exchange and are generally good measures of the current market sentiment. Thus, investing in World Indices CFDs that track these underlying indices are in effect, investing in the performance of these blue-chip stocks. As opposed to trading individual stocks, being able to long and short an index with CFD allows investors to trade on the price movements of the entire stock index as a whole. This is definitely a hassle free and cheaper way to invest in a basket of stocks that instantly diversifies your investment portfolio across a few sectors. Besides sectorial diversification, geographical diversification is another reason why investors look to World Indices CFDs. By trading in, for example, the Wall Street Index USD1 CFD, Singaporean investors are instantly exposed to the US market in a cost-effective manner regardless whether they have a bullish or bearish view on the market.
Besides diversification, World Indices CFD can be used as a hedging tool. For example, a client has 1 lot of an STI component stock which dropped drastically after purchase. Assuming bearish conditions, the client is able to hedge partially by establishing a short position in the Straits Times Index SGD5 CFD and thus, reduce his or her losses without selling the stock. Moreover, most of Phillip CFD’s World Indices CFDs cater for dividends and unlike Futures, Options or Warrants, World Indices CFDs do not have any expiration date.
With all the advantages that World Indices CFD offer to investors, it may be worthwhile to explore the World Indices CFD if your risk appetite allows it.
Do join us for our seminar "Opening Bell - Discover Strategies to Trade US Indices" on 25th September as we go through Technical Analysis strategies and set up live trades as the US Market opens!