The global political concern known as “Brexit” is making shockwaves through the investment community this week. This may ultimately be the most important event of the summer for the stock, bond, commodity, and currency markets. While the final outcome is far from certain, it goes without saying that savvy, long-term investors will look at the pronounced volatility as an opportunity rather than a calamity.
The immediate aftermath of the Brexit vote is to simply propagate the existing trends in gold, Treasury bonds, and defensive sectors such as utility stocks. These areas of the market have been the beneficiaries of fresh capital and surging prices all year long. Furthermore, it has compounded weakness in banking and financial stocks, which have struggled in the face of falling interest rates and structural headwinds.
This last week, we took an important step for client portfolios by eliminating a low volatility ETF that we have held for over two years now. It was actually one of my favorite positions to own. Not for the fact that it performed above our expectations, but because it allowed us the freedom to stay invested through all the mini-crises that arose during this period. Read more
As we near the mid-point of 2016, I examine some of the top ETFs for YTD fund flows. Many of these names are obvious defensive plays and may signal some short-term exhaustion in price. Observations of risk and reward are noted throughout. Charts include: large cap stocks, international stocks, low volatility stocks, bonds, gold, and more. Recorded on June 22, 2016.
When sorting through the list of available ETFs that offer high dividend yields, it’s very obvious that investors favor U.S. stocks. The overwhelming majority of assets are parked in funds with similar holdings such as AT&T (T) and Johnson & Johnson (JNJ). They also have low expenses, a high degree of daily liquidity, and have performed admirably when viewed over 3, 5, and even 10-year time horizons. Read more
Picking the right exchange-traded fund for your investment portfolio can be an arduous task that is often compounded by the sheer number of available offerings. In some sections of the ETF marketplace, there can be 10, 15, or even 20 competing funds that offer just slightly different variations on the same theme.
This is especially true in the commodity space through its wide variety of single-sector and diversified indexes. Many investors will default to the ETF with the longest history, lowest expenses, or largest assets under management. However, that strategy doesn’t always result in the best overall returns and can often lead to surprises in tax treatment or other unforeseen risks.