What You May Have Missed This Week...
The new ETF with 100% downside protection, dividend aristocrats vs. dividend growth and the new look Nasdaq 100!
In addition to the regular posts here on Substack, I also publish ETF research and notes over on my blog, ETF Focus.
In case you wanted to catch up on the latest research above and beyond what you’re reading here, this is a quick list of some of the most recent articles from the blog!
VTI vs. ITOT: Which Total U.S. Stock Market ETF Is Better?
For broad stock exposure in your portfolio, most investors stick with S&P 500 ETFs, such as the SPDR S&P 500 ETF (SPY) or the Vanguard S&P 500 ETF (VOO). I actually prefer total stock market ETFs, which introduce mid-caps and small-caps to the picture. Over time, smaller companies tend to come with a little more risk than large-caps, but they also provide the potential for greater returns and the diversification aspect tends to lower overall portfolio risk. A lot of investors have avoided small-caps because they've underperformed the S&P 500 for a while, but this has still been the case over the long-term.
LVHD: Why I Like This Low Volatility, High Dividend ETF Better Than SPHD
Last month, I wrote a fairly critical article on the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), noting how historically, the ETF has fallen flat on its promise of low volatility. The backtest I conducted revealed that SPHD actually possessed a similar standard deviation to the SPDR S&P 500 ETF (SPY), while incurring markedly higher drawdowns. In my search for a better low volatility, high dividend ETF, I stumbled upon the lesser-known Franklin U.S. Low Volatility High Dividend Index ETF (LVHD).
NOBL vs VIG: Dividend Aristocrats Versus Dividend Growth
In the world of dividend investing, dividend growth has historically taken the lead over high-yield dividends when it comes to long-term performance. It's a testament to the power of compounding, coupled with the stability offered by companies with a solid track record of growing their dividends.
Two popular ETFs that exemplify this approach are ProShares S&P 500 Dividend Aristocrats (NOBL) and Vanguard Dividend Appreciation ETF (VIG). Both funds prioritize dividend growth over high yields, but they follow different criteria to achieve this.
The QQQ Rebalance Is Complete! Here's What The Nasdaq 100 ETF Looks Like Now
The Nasdaq 100 completed its "special rebalance" after the close of the market on July 24th to address the overconcentration at the top of the index. I discussed the reasoning and potential impact of the change HERE.
The Nasdaq 100 index has been getting progressively more top-heavy for a while (as has the S&P 500), but that disparity really accelerated this year when the "magnificent 7" stocks - Apple, Microsoft, Amazon, Alphabet, NVIDIA, Tesla and Facebook - rallied hard during the AI mania period and were responsible for virtually all gains in the major indexes.
The New S&P 500 Buffer ETF That Offers 100% Downside Protection: Here's How It Works!
Perhaps the only thing that investors want more than to make a lot of money in the stock market is not to lose money! Behavioral studies have shown that people actually feel worse losing money than they do feeling good when making money. That's a tough idea to reconcile when it comes to investing in stocks, but one that investors need to come to terms with when committing their money. Or do they?
Best Quality ETFs
With so much of the stock market's rally over the past few years being driven by growth stocks, it's easy to forget that fundamentals matter. In times when economic conditions are weak or investor sentiment is damaged, owning ETFs that focus on companies with healthy cash flows, strong balance sheets and sustainable financial health can make a big difference in your portfolio. Even though the "magnificent 7" stocks have gotten all of the attention this year, investors are still paying attention to companies of high quality.
3 ETFs Yielding 8% and Higher That Don't Use Covered Calls (And Why I Wouldn't Buy Them)
When it comes to high-yield income investing, many investors might think of strategies like selling covered calls. As a result, derivative income ETFs like the Global X NASDAQ 100 Covered Call ETF (QYLD) and the JPMorgan Equity Premium Income ETF (JEPI) have attracted the bulk of investor attention.
Yet, these are hardly the only options. A wealth of other alternative assets, including master limited partnerships (MLPs), mortgage real Estate Investment Trusts (REITs), and senior loans, can provide the desired exposure to high yield income without the use of derivatives.
Investing Strategy: Using BTAL To De-Risk Your Equity Portfolio & Generate Better Risk-Adjusted Returns
If you've followed my work over the past several years, you know one of my favorite ETFs is the AGF U.S. Market Neutral Anti Beta ETF (BTAL). It's designed to be a risk hedge that goes long low volatility stocks with half of its portfolio and shorts high beta stocks in the other half. In isolation, it's probably going to perform poorly since the 50% short position will probably lose money more often than not. When paired with an equity portfolio, including the S&P 500 (SPY) and Nasdaq 100 (QQQ), it's proven that it can significantly reduce portfolio risk and greatly improve risk-adjusted returns.