Tag: ETF Investing Strategy

A Few New Retail ETF Investing Options

Posted on by Matt Thalman

Recent data reports and economic indicators have been mixed when it comes to the health of the American consumer. This has led some investors to think retail stocks are undervalued, while other investors believe they are overvalued. So whether you fall into the camp that thinks the next recession is “just right around the corner” or that the poor retail sales figures reported in December were not a sign the economy is struggling, but simply a blip in the data caused because of the government shutdown; there are a few newer Retail ETFs which give you the option to invest regardless of the way you think the market is headed.

The first place to start looking if you want to be long retail is with the SPDR S&P Retail ETF (XRT). The XRT would be most investors first choice if you are looking for plain vanilla long Retail ETF investing. XRT has been around since 2006; it has a lower than average expense ratio, when compared to others on this list, at 0.35%. IT has $250 million in assets, 96 holdings and is equally-weighted and draws stocks from the S&P Total Market Index, not just the S&P 500. It also invests in both e-commerce retailers and brick-and-mortar retailers.

Since most people would agree retails future is more online, the most basic ‘online’ Retail ETF is the Amplify Online Retail ETF (IBUY). IBUY has an inception date of April 20th, 2016, and offers equally weighted, well-diversified exposure to global online retailers. Firms must derive 70% of their revenues from online sales and can be any size in terms of market-cap (subject to the standard typical minimum size and liquidity constraints). The fund has 75% of its assets in US-based companies and 25% in foreign stocks. IBUY has an expense ratio of 0.65%, which is on the ‘high’ side, but considering the exposure the fund offers, it is not unreasonable. IBUY currently has $275 million in assets spread out over its 42 different holdings, which have a weighted average market cap of $52 billion. Wayfair (W), Etsy (ETSY), eBay (EBAY) and PayPal (PYPL) are four of the funds top 10 holdings, with none representing more than 5% of the fund. Continue reading "A Few New Retail ETF Investing Options" →

ETF 'Fee War' Could Help You Realize A Larger Portfolio Balance

Posted on by Matt Thalman

With more than 2,200 Exchange Traded Funds available to investors, fund managers are now finding that the lower they go in terms of fee’s, the more money they can attract. This isn’t a new idea as it was first spearheaded by the great late Jack Bogle, best known for his work at Vanguard and the man who is largely credited with the first index fund.

Bogle’s idea back then was that if he could get fund fee’s lower, he would be able to attract more money to the fund and therefore, in the long run, make more money for both his clients and his firm. Even decades after Jack changed the game for investment managers by slashing fee’s; Vanguard is still pushing the envelope on how low they can go. Recently the company filed regulatory documents showing that they were cutting the expense ratio on a number of ETFs; Vanguard Total Bond Market ETF BND (BND), Vanguard FTSE All-World ex-US VEU (VEU), Vanguard FTSE Europe ETF VGK (VGK), Vanguard FTSE Pacific ETF VPL (VPL), Vanguard Tax-Exempt Bond ETF VTEB (VTEB), Vanguard FTSE Emerging Markets ETF VWO (VWO) and Vanguard Total International Stock ETF VXUS (VXUS).

The move is the latest in what many have dubbed the ‘fee war’ which is taking place between fund managers. There is currently a handful of ETFs that have expense ratios as low as 0.03% two of which are managed by State Street Global Advisors and another two which are managed by Charles Schwab. There are three times as many ETFs with fees of 0.04%, and more than 150 with fees at or below 0.10%.
Continue reading "ETF 'Fee War' Could Help You Realize A Larger Portfolio Balance" →

Micro and Macro Investing Using ETFs

Posted on by Matt Thalman

Most people wouldn’t think that investors could use Exchange Traded Funds to invest from both a macro standpoint and from a micro point of view, but due to the increasing number of ETFs now available to investors, this is possible.

First off, what is micro or macro investing?

Macro investing is when you take high-level data points and base your investment strategy on that information. A few examples of high-level data points would be gross domestic product, unemployment stats, US Home Sales stats, current interest rates, consumer confidence, business confidence, the purchasing manager's index, and so on. These data points highlight certain aspects of the economy from the ten-thousand-foot level. The macro picture will tell you how an economy is doing from a very general aspect.

The opposite side of that is micro investing or taking information from much smaller sample sizes and making investment decisions based on that information. A microdata point could be something as small as Apple’s (AAPL) revenue from their most recent earnings report or Amazon.com’s (AMZN) number of Prime Members subscribers. This very small, very direct and specific information will not tell you how the overall US economy is doing, but it would give you a better idea about how Apple or Amazon are faring as opposed to just knowing that the US GDP grew by 3.0% last quarter.

So how would you take macro investment data and put it to use with ETFs? Continue reading "Micro and Macro Investing Using ETFs" →

Should You Own ETFs In A "Stock Pickers Market"

Posted on by Matt Thalman

Most Wall Street participants believe 2019 will be a “stock pickers” year; So how will that affect Exchange Traded Fund investors?

Well first off, what is a “Stock Pickers” market or year? That is a market in which to make a decent return; investors will need to pick individual stocks, not just buy the market as a whole or an index such as the S&P 500 or Dow Jones. At this point, most Wall Street analysts believe the major market indexes will end the higher just slightly higher. In mid-February, Goldman Sachs analyst posted a note indicating they think the S&P 500 will only climb to 3,000 by the end of the year, but the next few months could be flat.

Vanguard went a little further and said it believes the market will only return roughly 5% median annualized return over the next 10 years. Vanguard’s opinion paints an even worse picture than Goldman’s and hints at the idea that investors will need to be “stock pickers” for the next decade if they want to see returns greater than 5% annualized.

So, the experts are telling us that investors need to cherry pick individual stocks if they want to make a real-return greater than a few percent over the next year or maybe more. But what if they don’t know how to find and pick market-beating stocks, they need not worry because that is why actively managed ETFs where created. Continue reading "Should You Own ETFs In A "Stock Pickers Market"" →

Best January In 32 Years! Is It A Sign Of How 2019 Plays Out?

Posted on by Matt Thalman

After having the worst December in more than 87 years, the markets bounced back in January, gaining 7.9% in the month and the best January the market has experienced since 1987. This follows last January when the S&P 500 increased by 5.6%, which at the time was the best January the index had seen since 1997.

Historically when the market finishes January in the black, the market finishes higher for the year. Since 1928 when the market is up in January, it has finished the year higher 71% of the time. On a smaller timeframe say since 1950, when the market ends January higher, it has ended the year higher 85% of the time or 58 out of 68 times.

Now maybe your thinking to yourself that in 2018 the market was higher in January but ended the year in the red, down 6.2%. Well since 1980, we have not seen consecutive years in which the market end January higher, but finished the year in the red. Continue reading "Best January In 32 Years! Is It A Sign Of How 2019 Plays Out?" →