In repose to ‘the question of the week’ re how to get exposure to the BATS, your reader who asked that question may find the following information helpful, and I am happy if you forward this email onto him/her.

I get exposure to BATS by purchasing selected large liquid index ETFs – Vanguard VAE or VGE or iSHares IEM – the BATS are in their top 10 holdings, and as these ETFs are indexed these stocks will be highly weighted. In addition you get the benefit of some other highly desirable stocks, plus diversification.

Betashares has come up with the answer for the many Australian investors wanting to invest in the BATS – they have an ETF called Betashares Asia Technology Tiger code ticker ASIA, which is to be launched in the near term so your reader may wish to contact Betashares as to when this will be available.

I use ETFs as part of my investment plan, and found Betashares and VanEck spreads to be more consistent in a correcting market – I had an experience whereby iShares ETFs spreads widened considerably – part of this explanation is (justifiably) that the markets holding the underlying shares may be closed or closed till midday when ASX is open so the market makers use derivatives to hedge their positions, but I also found some of the Asian ETFs widen in comparison to other ETFs – my note is that some ETF providers appear to check their market makers more than others, however this is just my observation and may not be experienced by others or a constant behavior assigned to that ETF provider.

My recommendation is that user identify if or when the trading occurs in the underlying stocks (eg if BATS then trade often 1pm to allow the markets to open and then time for the market makers to stabilize a price) of ETFs should have an understanding of the role of market makers, acceptable spreads, and NAV, and if the spreads are too wide then contact the ETFs’ capital markets – I have done this on several occasions and they have been most helpful and on occasion facilitated the transaction.

Your reader may wish to simply run a MA40 or 200 over these Asian ETFs to apply basic technical analysis to ensure he is not buying into a market that may still be going down.
I hope this helps your reader, and I look forward to the Switzer conference next week.