Tag: ETF Investing Strategy

The Fed Is Buying These ETFs And Why It Matters (Part 1)

Posted on by Matt Thalman

The Federal Reserve is doing everything it can right now to help prop up the US economy and minimize the impact of the Covid-19 pandemic has on the economy, including purchasing ETFs.. The Fed has, by almost all market participants' views, acted very quickly, very aggressively, and rather decisively in their attempt to limit both the short and long-term effects this pandemic has on the US economy, despite the country permanently shutting down for nearly two months.

The first move by the Fed was to reduce interest rates by lowering the Federal Funds rate. Then, they began buying Treasury Bonds and mortgage-backed securities, (they have of course performed a number of other 'lending' type activities that have lower rates for lending and made it easier for more money to flow into the system, but for the average person knowing that the Fed lowered interest rates and started buying Treasury bonds and mortgage-backed securities, that is really the gist of it. To read more about the exact things they have done, check this article out.) Both these moves the Fed has done in the past, so no surprise there when they announced their plans.

However, in an attempt to pump liquidity back into the market, maintain low-interest rates, give business leaders and consumers the confidence they need to continue spending the Fed is now also buying Exchange Traded Funds.

Why are they buying ETFs and not something else? Continue reading "The Fed Is Buying These ETFs And Why It Matters (Part 1)" →

BNY Mellon With Truly Fee-Free ETF

Posted on by Matt Thalman

BNY Mellon has been a player in the ETF industry for years, however until just recently, it was always a 'behind the scenes' player. In early April, the Bank of New York Mellon changed that in a big way by not only introducing three brand new ETFs but offering one of them to clients for free.

Yes, you read that correctly, the BNY Mellon US Large Cap Core Equity ETF (BKLC) has an expense ratio of zero. The fund doesn't charge you anything to own it. Furthermore, the Bank's two other ETFs come with extremely low fees, 0.04% for each of them.

The BNY Mellon US Mid Cap Core Equity ETF (BKMC) and the BNY Mellon US Small Cap Core Equity ETF (BKSE). Both fall in the top 1% of lowest funds when based on expense ratio, and that's while the BNY Mellon US Large Cap Core Equity ETF was technically the first ETF to offer a zero-expense ratio. Since the launch of these three funds on April 9th, BNY Mello has also launched a few other ETFs, all of which have low fees but one other that doesn't have any, the BNY Mello Core Bond ETF (BKAG).

You may be wondering about another ETF that has been touted as a zero-fee ETF or the first free ETF, it's the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX) however while they don't currently have an expense ratio, they could in the future. The reason for that is because the SoFi products have a fee reducing waiver, which would need to be renewed for the fund to maintain its zero-fee long term. Continue reading "BNY Mellon With Truly Fee-Free ETF" →

4 ETFs You Should Start To Buy

Posted on by Matt Thalman

Over the last few weeks, we heard first-quarter earnings from some major US companies. And while most of the earnings reports only gave a small glimpse of how the economic shutdown has affected their businesses, some companies performed much better than others. The companies one would expect to struggle when non-essential companies were forced to close and Americans were told to 'stay at home' obviously struggled. However, the technology companies that are allowing us to purchase products and have them delivered to our front doors, the companies that are allowing us to communicate with friends and family remotely and the infrastructure firms who offer the back-bone for millions of Americans to successfully work from home, well those companies are doing great, maybe better than ever.

So, let's take a look at some ETFs that hold those companies and one that may be a little outside the box but could be focused on one industry that could be a huge winner from 'stay at home' orders.

The first is the First Trust Dow Jones Internet Index Fund (FDN). FDN invests in a market-cap-weighted index of the largest and most liquid US internet companies. The FDN has 43 holdings, all of which are US-based companies. Its top 10 holdings make up 48% of the fund and the weighted average market cap is $214 billion. The fund has an expense ratio of 0.52%. Amazon, Facebook and Netflix are its three largest holdings and if Alphabet's stock wasn't split into two classes, that would likely be in the top four of FDN. The fund is up 6.29% year-to-date and higher by more than 21% over the past month, so as of May 1st, you have not lost any money owning this ETF in 2020, better yet, your up unlike most investments right now. Continue reading "4 ETFs You Should Start To Buy" →

Stay Away From These Industry Focused ETFs

Posted on by Matt Thalman

The economic impact caused by governments around the world to combat the spread of Covid-19 and save lives has taken its toll on nearly every industry. However, while there are arguments to be made that most of those industries will “bounce” back in a reasonable fashion, there is one in particular that truly may never be the same. Or at the very best not until we see a truly effective treatment for Covid-19 or a vaccine.

That industry is travel and leisure-tourism. The airlines have been battered, hotel stocks have been beaten up, and if tourist attractions around the world where publicly traded companies, most of them would have likely already filed for bankruptcy (mild attempt at a joke, you will still be able to visit the Grand Canyon and the pyramids in Egypt in the future.)

But in all seriousness, how long until you will feel comfortable going to New York city and jumping in an elevator to head to the top of the Empire State building? Or even fly to Denver, to stay in a crowded Vail Resorts owned ski resort and then sit on a chair lift or gondola with strangers? How about walk around and stand in lines at an amusement park? Go to a large sporting event or music venue? Continue reading "Stay Away From These Industry Focused ETFs" →

Oil ETFs For When and If The Industry Turns A Corner

Posted on by Matt Thalman

The word 'wild' doesn't even start to describe the oil markets over the last few weeks. We saw a price war between Russia and Saudi Arabia after world economies shut down to slow the spread of Covdi-19. Then an agreement between Russia, Saudi Arabia, and the other OPEC+ countries. That was followed by negative prices on futures contracts in the US. Majors changes to how large oil industry ETFs operate and several funds closing altogether. And then oil began to recover as inventory levels weren't as bad as many expected them to be.

So, your guess is as good as mine in terms of what happens next. However, most would agree that when world economies begin to open back up and operate in some form of 'new normal,' we will likely see demand for oil increase, which will probably send the prices higher, if not at least stabilize them. With that sort of thinking, there are a few ETFs you may want to put on your watch list and consider buying when you feel the mayhem, we experienced over the last few weeks is over.

The first is the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The XOP has 57 holdings with an average weighted market cap of $21 billion. The fund also has a distribution yield of 3.05% and an expense ratio of just 0.35%. XOP has over $2.12 billion in assets under management, making it one of the largest oil and gas-focused ETFs you can buy. Furthermore, the fund offers an equal-weighted approach, so it is not weighed down by just a few big names in the industry. However, give the fund a little more risk during a time like now because if some of the smaller firms struggle, they do matter more to the fund than if the ETF was weighted differently. Continue reading "Oil ETFs For When and If The Industry Turns A Corner" →