Displaying items by tag: ETFs

(New York)

A REIT as an ETF might be an odd concept for some advisors. Since REITS are a special asset class unto themselves, and ETF made up of them could seem foreign. Their big advantage is that they are much cheaper than actively managed real estate strategies. However, risks abound, especially as many REITs tend to focus only on the US market, which could be very risky at the moment. One good REIT ETF is the Schwab US REIT, which has returned over 5% this year despite rising rates, and sports a 4%+ yield. Schwab points out that one of the best parts of REITS is that they “do not move in lockstep with either stocks or bonds.” The Vanguard Real Estate ETF is another good REIT choice. For global exposure try the SPDR Dow Jones Global Real Estate.

FINSUM: We like REITs in principal, but rates are a big worry at the moment. They seem like a good way to earn yield right now, but should probably be hedged.

(New York)

Retail clients, and some advisors, are adopting an increasingly defensive outlook on the market as the economy roars and rate hikes look more and more certain (not to mention soaring valuations). So what are the best defensive ETFs to protect a portfolio? The range of defensive strategies is broad—from dividend-focused, to shorting, to multi-factor. Some of the most popular include the AdvisorShares Dorsey Wright Short ETF, the Fidelity Dividend ETF for Rising Rates, or the Principal Mega-Cap Multi-Factor Index ETF.

FINSUM: It seems a smart choice to have defense ETFs be a decent portion of one’s portfolio right now. That said, we would be anxious to make shorting-focused ETFs a substantial holding.

(New York)

For several years Vanguard was seen as the champion of low-cost investing. It led the revolution in ever-lower cost ETFs. However, just recently, it seems to have fallen on hard times as it is facing challenges on multiple fronts. In particular, it is suffering at the hands of Fidelity, which is undercutting it on fund pricing. Fidelity’s recent no-fee index funds mean they are even cheaper than Vanguard’s lowest cost funds. The second, and perhaps even more worrisome challenge, relates to investment minimums, which Fidelity did away with on its cheapest funds. Vanguard’s minimums are now starting to look old-fashioned by comparison.

FINSUM: The best way for Vanguard to compete would be to merge some of the classes of their products. However, doing so would require a big revenue haircut, all of which means the company has some tough choices to make.

(New York)

Fidelity made a huge splash in the asset and wealth management world’ about a month ago when it launched the markets first completely free indexed mutual funds, and with no investment minimums. The move sparked big share price losses for other asset managers and seemed to spell doom for the industry. But how have the funds actually performed so far? The answer is well. The pair of funds have taken in almost $1 bn of client money in just a month, which is considered a solid success.

FINSUM: We think this is a good showing for Fidelity, but one of the other issues the zero fee funds have brought up is that there are many other terms of index funds that investors need to pay close attention to. Not just price.

(New York)

Passive funds have seen a meteoric rise since the Financial Crisis, with AUM soaring by trillions. But within that huge growth, what have been the best returning passive funds? Financial Planning produced a slide show presenting the twenty best. The top performing funds list is dominated by the big three providers—BlackRock, Vanguard, and State Street, who also have 82% of all passive AUM. The top five returning funds are the SPDR S&P Biotech (XBI), Invesco Dynamic Pharmaceuticals ETF (PJP), the First Trust NYSE Arca Biotech ETF (FBT), the Invesco Nasdaq Internet ETF (PNQI), and the First Trust Dow Jones Internet ETF (FDN).

FINSUM: Looks like biotech and tech stocks had a great decade (nor surprise there). The rest of the top twenty is similarly dominated by tech and healthcare, but consumer stocks, defense, and semiconductors also show up.