Financial Pros Top 10 ETF Searches This Week

There is an old saying on Wall Street: “Everyone is a genius in a bull market.”

However, with the stocks taking a turn for the worse in 2022, it’s become a true stock pickers market. 

For example, if you’ve been long individual oil and gas stocks like Occidental Petroleum (OXY) and Marathon Petroleum (MRO) from the beginning of the year— you are having one heck of a year. 

On the other hand, several stocks which sparked the bull market in 2020 and 2021 seem dead in the water. Firms like Roblox (RBLX), Shopify (SHOP), and even Netflix (NFLX) are down more than 60% so far in 2022. 

And that’s why diversification is critical if you want to have long-term success in the stock market. Of course, you can try to build your portfolio and test your luck. Or you could do what most savvy investors do and invest in ETFs. 

Today we’ll look at ten of the most popular ETFs amongst financial pros for this week.

These ETFs were the most actively searched and form the basis of where we expect the majority of money flows.

We broke them down into types of ETFs: Index Funds, Leveraged Funds, Commodity ETFs, and Actively Managed Funds.

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Index Funds

1. The SPDR S&P 500 ETF (SPY): This ETF replicates the S&P 500 index. The S&P 500 is a basket of 500 companies that are meant to be a reflection of the US Economy. The index is weighted, the top holdings include Apple(AAPL), Microsoft(MSFT), Amazon(AMZN), Tesla (TSLA), GOOGL (Alphabet), and Berkshire Hathway(BRK.B). Some of the strengths of SPY are that it’s highly liquid, carries an expense ratio of just .09%, and offers shareholders a dividend of $5.54 per share. 
2. Invesco QQQ Trust (QQQ). This ETF is meant to represent the top 100 Nasdaq stocks and mainly consists of tech names. Like the SPY, QQQ is very liquid, it has an expense ratio of 0.20%, and offers a dividend of $1.50 per share. The QQQ is a highly weighted index. For example, Apple(AAPL), Microsoft(MSFT), Amazon(AMZN), and Tesla (TSLA) represent about 35% of the ETF, ironically many of the same companies that make up the top 10 for the S&P 500.
3. SPDR Dow Jones Industrials Average ETF (DIA). Before the SPY, and QQQ there was the Dow Jones Industrials Average which was primarily used to represent the economy. It consists of 30 of the largest companies in the world. And unlike the SPY and QQQ, it isn’t weighted as heavily into tech. For example, UnitedHealth Group Incorporated (UNH), Goldman Sachs (GS), and Home Depot (HD) represent about 22% of the ETF. The DIA has an expense ratio of 0.16% and offers its investors an annual dividend of $5.31 per share. 
4. iShares Russell 2000 ETF(IWM). All three of the index ETFs mentioned above consist primarily of large caps. The IWM on the other hand represents 2000 small cap companies. And because of that, it is considered generally riskier. But unlike the QQQ, DIA, and SPY, the IWM doesn’t put a heavy weighting on any individual stock. For example, the highest weight stock is Ovintiv (OVV) at .51% of the ETF. The expense ratio for IWM is small, at 0.19%. It also offers investors a $1.62 per-share annual dividend. 
5. iShares 20+ Year Treasury Bond ETF (TLT). While TLT doesn’t track a specific index, we felt it made sense to stick it with the others in this category. If you’ve been following the stock market in 2022 then you already know that interest rates are a hot topic. This ETF seeks to track the investment results of the ICE U.S. Treasury 20+ Year Bond Index. It generally invests at least 90% of its assets in bonds of the underlying index and at least 95% of its assets in U.S. government bonds. TLT has an expense ratio of 0.15%

Thoughts on the Index Funds

Many of the major index funds carry incredibly low fees. Do not accept anything higher than 0.25%.

Many brokers will have their own versions of index funds that track similar or the same components for lower costs. Make sure you search around for the one that suits you best.

For those that actively invest in the market, consider using the SPY as a base investment, moving money in and out of individual investments back to and from the SPY. It’s a great way to stay invested in the market.

Conversely, the TLT is a great way to buy longer-dated U.S. treasury bonds. However, you can also use its inverse, the TBT to bet against them.

Leveraged ETFs

6. ProShares UltraPro QQQ (TQQQ). If you’re feeling frisky then you might want to check out TQQQ.  It offers 3X the daily long leverage to the QQQ. In other words, if the QQQ rises 3% on the day, you can expect the TQQQ to be up roughly 9%. Of course, leverage works both ways. And if you’re on the wrong side of the trade, it’s going to hurt 3X as much. The expense ratio for TQQQ is 0.95%. And unlike the QQQ, the TQQQ pays no dividend to investors. 
7. Direxion Daily Semiconductor Bull 3X Shares (SOXL). This ETF offers 3X the daily long leverage to the PHLX Semiconductor Index. In other words, this ETF is solely focused on stocks in the semiconductor space. Its top holdings, which are weighted, include: Broadcom (AVGO), NVIDIA Corporation (NVDA), Intel Corporation (INTC), and Advanced Micro Devices (AMD). All together, there are 35 stocks in this ETF, which charges an expense ratio of 0.90%. 

Thoughts on Leveraged ETFs

Leveraged products are good short to medium-term holdings. Ones with 3x leverage often do not hold stocks and therefore carry additional risk.

One way to use these funds is for index purchases on major pullbacks, such as what we saw in 2020. This can help you get more leverage out of your capital.

Commodity ETFs

You don’t need a futures account to gain access to some of the most popular products. In fact, several ETFs have been designed to track them. Below, you’ll find some of the most popular ones. 

8. SPDR Gold Shares (GLD). This ETF gives investors a chance to profit from the moves in spot gold prices. The underlying assets consist of gold bullion stored in secure vaults and NOT shares of individual companies. That’s good news since there are physical assets to back up the stock. The expense ratio for GLD is 0.4%. 
9. iShares Silver Trust (SLV). Although silver is a precious metal, it’s much more common than gold and has more industrial use. This ETF invests in physical silver, which it keeps in vaults, similar to GLD. It is one of the easiest ways investors can gain exposure to silver without buying the physical product. The fund has an expense ratio of 0.5%

Thoughts on the Index Funds

GLD and SLV are backed by physical assets. Many of the energy names like USO for oil and UNG for natural gas are not. That means the USO and UNG will lose value over time unless the price of those commodities continues to rise.

Actively Managed ETFs

10. ARK Innovation ETF (ARKK). Very few if any ETFs have received more scrutiny and attention than Cathie Woods ARKK ETF. This actively managed ETF was one of the best performing funds in all of 2020. However, like many of the high-tech and growth stocks, it invests in, it is down considerably in 2022. In fact, it’s down nearly 50% YTD. 

Although it is an actively managed ETF, the top holdings currently include Tesla (TSLA), Zoom Video Communications (ZM), Teladoc Health (TDOC), Roku (ROKU), and Coinbase (COIN). 

Thoughts on Actively Managed ETFs

You’d better believe in the fund manager to invest in these funds because you may end up paying some serious fees.

Thankfully, Woods’ fund only costs 0.79%. She has some interesting theories about inflation, so if you want to go with her fund, do some digging before entering a position.

Bottom Line

ETFs come in all shapes and sizes. But what makes the ten mentioned above attractive is that they offer a chance to gain exposure to some of the most important themes in the market quickly and easily. Not only are they highly liquid, but they also offer options as. That means you can use them as tools for speculating and hedging. 

And while these ten mentioned are among the most popularly traded, there are over 8K ETFs investors can choose from. Make sure you read the prospectus and understand the fees associated with them before you invest.