Displaying items by tag: low cost

In recent months, the stock market has been extremely volatile, prompting increased interest in low-volatility low-cost ETFs. While the market has seen gains this year due to a growing appetite for riskier investments, uncertainties like the Federal Reserve's future actions, geopolitical tensions, and the upcoming U.S. presidential election still loom large. 

Low-volatility ETFs offer investors a way to participate in the market with potentially less risk, although they are not immune to sharp downturns. These funds may underperform compared to more dynamic portfolios, especially during market surges. However, they can be attractive for those prioritizing capital preservation over high returns.

 Examples of popular low-volatility ETFs include the Invesco S&P 500 Low Volatility ETF, which focuses on the least volatile stocks in the S&P 500, and the iShares MSCI EAFE Min Vol Factor ETF, which targets lower-risk companies in developed markets outside the U.S.

Finsum: Be mindful of what thematic ETFs you want to integrate into your portfolios, because there will be a chance to capitalize in the coming months. 

Investors are increasingly turning their attention to small-cap stocks and ETFs due to a combination of favorable valuations, historical trends, and recent market dynamics. This renewed interest has been highlighted by a significant rally in small-cap stocks, particularly during July when the Russell 2000 recaptured much of its earlier underperformance relative to large-cap indices. 

Analysts suggest that small-caps are still undervalued, with some estimates indicating a 20% to 30% discount compared to larger stocks. This presents a potential opportunity for prolonged outperformance in the small-cap sector. Notable options include the iShares Russell 2000 ETF (IWM), which tracks a broad index of small-cap companies, and the Vanguard Small-Cap Value ETF (VBR), which focuses on value-oriented small-cap stocks.

 Each of these ETFs provides investors with a strategic entry into the small-cap market, with varying levels of risk and potential return depending on their investment goals.

Finsum: Also note that as interest rates come down small caps are historically in a position to take advantage because they are more levered. 

Since their launch three decades ago, exchange-traded funds (ETFs) have become a favored investment vehicle. ETFs, which trade like stocks but hold baskets of securities, saw significant growth in 2024, with more money flowing into ETFs than individual stocks. 

U.S.-based ETF assets hit a record $9 trillion in May, experiencing net inflows while mutual funds saw outflows. Investors are attracted to ETFs due to their low cost, ease of trading, and tax efficiency. The recent approval of cryptocurrency ETFs has further boosted their popularity, while actively managed ETFs are also on the rise. 

The iShares Core S&P 500 ETF (IVV) offers broad exposure to large-cap U.S. stocks at a low expense ratio of 0.03%. The iShares Core S&P Mid-Cap ETF (IJH) provides access to mid-cap companies with no overlap with large-cap holdings. The iShares Core S&P Small-Cap ETF (IJR) focuses on profitable small-cap companies, giving it a high-quality tilt that has outpaced the Russell 2000 in recent years.

Finsum: Cost effective ETFs are also great tools to get market segmentation exposure. 

Vanguard’s low-cost ETFs are immensely popular, with options like Vanguard Total Stock Market ETF and Vanguard S&P 500 ETF leading the pack. However, there are other notablev ETFs that can enhance your portfolio if you venture beyond these well-known choices:

VBR, a Gold-rated ETF, focuses on small-cap value stocks and charges an exceptionally low 0.07% expense ratio. This ETF has consistently outperformed its category peers, despite small-cap value funds being out of favor for many years.

BNDX, a Silver-rated ETF, offers exposure to the global bond market, complementing a U.S.-heavy bond allocation. It invests in a diverse portfolio of foreign investment-grade bonds, hedging against currency risk, with an equally low expense ratio of 0.07%.

Finally, VT provides exposure to nearly 10,000 stocks worldwide, including U.S., foreign, and emerging markets, making it one of the broadest stock ETFs available. With its diverse mix, it can serve as a comprehensive, standalone stock investment for long-term portfolios.

Finsum: The last one to consider might be a momentum fund as interest rates drop and growth picks up. 

ETF costs have fallen precipitously over the last decade but finding growth-oriented options can be a small challenge. Investing $3,000 evenly across these ETFs incurs just $12 in annual fees, making it a cost-effective strategy. All three ETFs have outperformed the S&P 500 and Nasdaq Composite in 2024, suggesting they have more growth potential.

• The Vanguard Russell 1000 Growth ETF (VONG) tracks top growth stocks from the Russell 1000 index, boasting significant exposure to tech giants like Microsoft, Apple, and Nvidia, and offers a low expense ratio of 0.08%. 
• The Roundhill Generative AI & Technology ETF (CHAT) targets the burgeoning generative AI market, with holdings including Nvidia, Microsoft, and Alphabet, and has seen a 22% rise year-to-date with an expense ratio of 0.75%. 
• The VanEck Semiconductor ETF (SMH) provides broad exposure to the semiconductor industry, including companies like Taiwan Semiconductor and ASML, with a low expense ratio of 0.35%. 

Finsum: Technology seems to have sustained the high interest rate below and could be poised to turn around!