NEW YORK (
) -- Highly focused exchange traded funds that hoard big-volume stocks tie their fortunes to the ups and downs of companies by concentrating risk and reward. Trading funds instead of individual stocks may be a good alternative to target holdings and gain diversification.
On the other hand, if you're trying to limit exposure to the following Baker's dozen of stocks, the associated ETFs below might not be for you. The 13 stocks mentioned in this article accumulated a dollar trading volume of more than $1 billion of market activity on Dec. 8, as measured by Bloomberg.
The two largest groups of stocks are financial services and technology.
One of the five financial stocks ranks as the most actively traded. In one trading day, $4.9 billion worth of
Bank of America
changed hands. The exchange traded fund with the largest exposure to Bank of America is the
Dow Jones U.S. Financial Services Index Fund
racked up $2.2 billion in trading. With 15.8 million Citigroup shares, or 7.2% of total assets, no fund is more concentrated in Citigroup than the
SPDR KBW Bank ETF
tops the list of holdings for
Dow Jones U.S. Broker-Dealers Index Fund
at 11% of the ETF's portfolio.
, at a concentration of 24%, and
, at 19%, are the two largest positions in the
Regional Bank HOLDRS
A total of $4.7 billion in
shares and $1.1 billion in
stock trades crossed the wires in a single trading session.
Internet Architecture HOLDRS
is the best ETF to play those two high-tech companies as they make up 16% and 13% of assets.
is the largest position of the
The last two actively traded technology stocks take up giant portions of their corresponding ETFs. The No. 1 holding of
ProShares Ultra Semiconductors
, accounts for 35% of assets. Even more concentrated,
is 42% invested in
took the sixth most actively traded ranking, with $1.4 billion in volume. With a 19% concentration,
bet heavily on Pfizer.
is the largest holding of
ProShares Ultra Oil & Gas
at 28%, making the fund the most dependent of all ETFs on Exxon Mobil.
Finally, the fund most closely tied to
, at 14% of assets, is the
Vanguard Industrial Index ETF
The exchange traded funds mentioned above were selected with the help of the
Web site and the percentages listed are from each fund's Web page.
Disclaimer: The stocks mentioned are so liquid that any of the funds may have already liquidated, increased or decreased their positions.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.