3 ETF Investing Strategies You Can Use Right Now
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The Juice thinks pretty much all investors should use ETFs to invest in stocks. In fact, if you’re investing for the long-term, there’s not much reason to stray from an all-ETF strategy. In today’s Juice, we expand on that thought, as we define and detail three tiers of ETF investing. Take this together with our recent coverage of traditional long-term investing and alternative investments and you can see how you might merge the two areas into a portfolio that’s simultaneously sensible and aggressive. When The Juice creates sample portfolios in 2025 — informed by these 2024 installments — you’ll see exactly how easy it is to mix the traditional with the alternative. For today, on with the important ETF discussion. The Broad Market Core Of Your ETF Portfolio Before you do anything, you have to create the core — the foundation — of your long-term, buy-and-hold portfolio. That core should consist of broad market ETFs, starting with:
Over the long haul, SPY and QQQ go up in a straight diagonal line. SPY is up more than 90% over the last five years. QQQ outperformed over the same period with a gain of more than 150%. With SPY and QQQ, you’re getting access to the leaders of the US economy across sectors, but with heavy exposure to tech’s biggest names. Think Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT) and Amazon.com (AMZN). From here, The Juice strongly suggests the following two ETFs to round out your broad market strategy:
SCHD tracks the Dow Jones U.S. Dividend 100 Index. So you get a solid portfolio of America’s top dividend payers, including Home Depot (HD), Verizon (VZ) and Chevron (CVX). SCHD has returned around 50% over the last five years and currently yields about 3.5%. It most recently paid out a quarterly dividend of approximately $0.75 per share. IWM does for small caps what SPY does for the broad, large cap economy and QQQ does for the top 100 Nasdaq companies. It’s an index tracker. Over the last five years, IWM has returned nearly 50%. See today’s Freshly Squeezed section for an edition of The Juice where we focused on IWM. The Adjacent Core Of Your ETF Portfolio From here, you have a decision to make in your portfolio’s core. And it comes down to personal preference and risk tolerance.
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And, at day’s end, there’s no reason why you can’t do both. For The Juice’s money, we would use the following two ETFs in response to each of the aforementioned questions:
After you have large company/tech stocks, dividend stocks and small cap stocks, you’re essentially solidifying around — adjacent to — that primary core. You’re securing your foundation. TOPT, which we told you about early this month, is a brand spanking new ETF that The Juice really loves, but only if you want to double down on your exposure to America’s 20 largest public companies: In fact, the top five holdings in TOPT — Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT), Tesla (TSLA), Amazon.com (AMZN) — account for 53.6% of the fund. Along with a little bit of cash, the remaining 46.4% of TOPT sits in the next 15 top stocks, starting with Meta Platforms (META) at a 4.6% concentration and ending with the 20th holding, Abbvie (ABBV) at 1.7%. In between, you have companies such as Mastercard (MA), Visa (V) Home Depot (HD), Costco (COST), Exxon-Mobil (XOM) and JPMorgan (JPM). On the other end of the spectrum — to even out your exposure — look to RSP, an equal-weight ETF that owns the name of the S&P 500… …in equal proportion. Not based on market cap. So, in SPY, for example, names at the bottom of the list, such as Alaska Air Group (ALK), Hasbro (HAS) and Boston Properties (BXP) have as much of a relative impact on performance as Apple or Microsoft. In addition, consider rounding out your portfolio’s core with sector-specific ETFs or maybe an international fund. It’s all about how you want to diversify at the core. Branching Out With More Specific Smart-Beta And Active Strategies At the end of today’s installment, you’ll find a link defining and detailing smart-beta ETFs. This category of ETFs is similar, though not the same as active ETFs. With the latter, there’s often more leeway with regards to stock selection by a fund manager. Smart-beta ETFs use a rules-based approach to index investing. So they don’t passively track an underlying index; they trick it out using a specific set of criteria. The playing field is super large here. It includes ETFs such as the Pacer US Small Cap Cash Cows 100 ETF (CALF), which our sister newsletter, The Spill, recommends and The Juice covered the other day. CALF screens S&P 500 stocks on the basis of cash flow. If that resonates, you might consider it. Or find some other metrics-based or otherwise active approach you find potentially profitable. No matter what you do, pay attention to expense ratios. Often, when ETFs get fancy, they charge higher expense ratios simply because more active management (be it, with a smart-beta strategy or stock picker approach) costs more money for a fund to execute. We expanded on expense ratios last week in The Juice, so we highly recommend checking out that installment. The Bottom Line: If you take together today’s installment as well as the links within it and in our Freshly Squeezed section below, you’ll have yourself not only a merry little Christmas, but the best damn primer on ETF investing in the financial media business. If we may say so ourselves. As we have been doing in recent weeks with alternative investing, we’re taking the vast ETF landscape and condensing what’s important into bite-size chunks you can use to help inform your investing activities. Stick with The Juice through the holidays as we continue this trend of helping you get more from your money. Then, we kick off the New Year with sample portfolios and strategies that show you exactly how to merge the traditional with the alternative. |
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Proprietary Data Insights Top Broad Market ETF Searches This Month
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