If you want to modernize your portfolio with ETF futures, it is safe to assume that you have a portfolio already. In case you are reading this but you do not have a portfolio, you need to know what a portfolio is so that you will understand the theme of this article. A portfolio can be described as a collective term that covers all your financial assets. These assets include your stocks, bonds, mutual funds, exchange traded funds (ETFs) and other money market instruments you are currently holding. The purpose of a portfolio is to make profit so your portfolio should bring you some returns on investment if it is properly managed. Depending on the type of investor you happen to be, you can manage your portfolio yourself or you can entrust your portfolio to a portfolio manager.

One of the best things you can do as an investor is to diversify your portfolio. Let us assume that your portfolio consists of stocks and bonds. You can diversify your portfolio by investing in both penny stocks and blue chip stocks. You can also diversify your portfolio by investing in stocks from different industries like pharmaceuticals, mining, food, oil and gas. You can also invest in different types of bonds and bond funds. The purpose of diversification is to protect the investor. You cannot put all your cash in the same industry or in the same instrument. Diversification keeps you safe in the sense that you are still covered if things do not go well in some industries. In a way, we can say that the investor with a diversified portfolio has hedged his or her investment and this is a sensible move.

Apart from diversifying your portfolio, you can go one step further by investing in ETFs and ETF futures. The abbreviation ETF stands for Exchange Traded Funds. These can be described as pre-packaged assets that represent a commodity or stocks in a certain industry or sector. For instance, oil and gas ETFs are basically selected stocks from companies in the oil and gas industry while banking ETFs are stocks from the banking industry. The good thing about ETFs is that they are like mutual funds. Instead of buying just one stock, you are buying a selection of stocks and since you have carefully selected these stocks, they are likely to be safe.

If you want to invest in ETF futures, you have to understand how the futures market works. A futures contract places an obligation on the buyer to buy an asset such as stocks or commodities at a fixed price on a particular date in future. ETF futures are therefore stocks or commodities which are traded in future at a particular price based on the terms of the futures contract.

The good thing about ETF futures is that you kill several birds with just one stone. You reduce risk, increase profit potential and save cost. This is the hallmark of the modern portfolio and this is why many experts claim you can modernize your portfolio with ETF futures. If you have not considered investing in ETF futures, do so now because it is in your best interest.