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Proprietary Data Insights Top ETF Searches This Month
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There’s An ETF For That As The Juice continues our series on exchange-traded funds (ETFs), our proprietary Trackstar database of the tickers investors search for most nicely illustrates the diversity of ETF investing. Before we dig into that diversity, you can look back at our previous two ETF installments:
Now, we take the next step. All Flavors Of Diversity In ETFs As is almost always the case, Trackstar shows the SPDR S&P 500 ETF (SPY) and Invesco QQQ (QQQ) as the two most searched for ETFs. Within this broad market category of ETFs, you have various options. Look further down the list and you find the Vanguard S&P 500 ETF (VOO), which like SPY, looks to mimic the performance of the S&P 500 index. A quick look at the performance of the actual S&P 500 index alongside SPY and VOO shows you get exactly what these two ETF products advertise. Source: Google Finance Same story on longer-term performance. Source: Google Finance You can replicate this exercise with the Nasdaq, comparing the actual Nasdaq composite to QQQ and #7 in today’s Trackstar list, the Fidelity NASDAQ Composite Index Track (ONEQ) with one caveat. Source: Google Finance As the five-year performance chart shows, QQQ outperforms both the Nasdaq composite and Fidelity’s ONEQ. Why? Because QQQ tracks Nasdaq’s top 100 stocks whereas the broader Nasdaq composite and ONEQ includes the larger universe of Nasdaq stocks. Hopefully this exercise helps explain the relatively straightforward nature of ETFs that provide broad market exposure. Scroll with us to dig deeper into sector-specific ETFs. |
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ETF Investing |
Using ETFs To Make Investing Super Simple
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Key Takeaways:
The remaining names on the Trackstar list of most searched for ETFs includes all sector-specific products. Let’s highlight a couple to detail exactly what this means for you on the ground. In a nutshell: Spreading your money across multiple ETFs can help simplify investing, while constructing a diverse portfolio. For example:
This ETF also tracks an index. But a more specific one. VGT attempts to mirror the performance of the MSCI US Investable Market Information Technology 25/50 Index. Fancy name. Basically it tracks IT stocks of various sizes. A look at VGT’s holding shows Apple (AAPL) and Microsoft (MSFT) comprise nearly 41% of the fund. Protip: Always look at an ETF’s holdings. Often, you’ll run into these situations, even with index-tracking ETFs. You’ve got to make sure you’re comfortable being overweight Apple and Microsoft in this specific position. Another example:
While more specific, XLE is also quite straightforward. It tracks the performance of the S&P 500’s energy subsector. With just 21 stocks total in the fund, you’ll be – as the name implies – concentrated in energy and overweight some of the sector’s biggest names. Source: State Street Drilling down even further (pun intended!), you can expose yourself strictly to oil via #6 on our Trackstar list, the United States Oil Fund (USO). USO strives to correlate with the price of West Texas Intermediate Light Sweet Crude Oil by investing in near-term oil futures contracts. Pairing up in these two names over the last year would have worked out well for you. Source: Google Finance
Some ETFs, such as Trackstar’s #9, the ARK Innovation ETF (ARKK), create their own themes. You might have heard of ARK, actively managed by Cathie Wood. The fund focuses on tech stocks with the potential for “disruptive innovation”, which means companies with products and services with the potential to “change the way the world works.” That’s some lofty stuff! ARK’s performance: not so lofty. It’s down more than 60% over the last year. ARK’s top three holdings at the moment: Zoom (ZM), Tesla (TSLA), and Roku (ROKU). The Bottom Line: Hopefully, today’s edition of The Juice helps bring to light the endless possibilities that exist with ETFs, particularly if you’re looking to diversify by situating your portfolio across broad swaths of the stock market. We merely scratched the surface. Name the sector and there’s likely an ETF you can buy to participate. As we continue this series on ETFs we’ll provide more examples along these lines. The Juice will also detail how to use ETFs when you’re extremely bullish – or bearish – on a specific space or sector. |
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