Setting reasonable expectations for dividend income is an aspect of investing that many retirees have yet to embrace. With 10-Year Treasury yields hovering in the low two percent range, there is generally a need for other investment options to supplement high quality fixed-income. This is often when investors turn to exchange-traded funds that track a basket of riskier assets to generate the income they desire or to chase a top-performing market sector.
Every year brings with it new challenges with respect to sector leaders and laggards. This is particularly acute for investors that own individual stocks or that like to add tactical exposure via sector-focused ETFs. Sometimes you are in the sweet spot and other times you miss the mark entirely.
That scenario perfectly encapsulates the recent divergence between the top and bottom performing sectors this year. Technology has been the big outperforming growth theme that has been driven by tremendous momentum and enthusiastic sentiment. Conversely, energy stocks have languished by the wayside as falling oil and natural gas prices weigh on valuation prospects. Read more
ETF investors have wholeheartedly embraced the transparency and low-cost of passively managed investment vehicles. Billions of dollars every year since the great financial crisis have left the obfuscated world of high-priced mutual funds and transitioned into index-based ETFs.
This rotation is almost entirely based on the foundation that you know exactly what you own, why you own it, and what the minimal expenses will be. There is a comfort and reliability that the fund will perform to an exacting standard with very little deviation from its benchmark.
The investment universe is littered with articles touting the advantages of various funds or strategies. I should know. I have written for the last five years about the characteristics of ETFs and closed-end funds that we consider for our clients. Some pass my rigorous test, while others are weeded out through careful analysis.
Throughout this time, I have realized it’s easy to compare two or three funds in a vertical category and dissect their merits. Some will stand out based on costs, while others may promote index methodology, tax efficiency, or security selection as their primary benefits. Read more
In this month’s video, I look at the technical trends developing in growth versus value stocks. Chart review includes analysis of large-cap, small cap, international, Treasury bonds, and high yield bond ETF prices. Observations of risk and reward are noted throughout, with an emphasis on trend following and sensible portfolio management. Recorded on May 31, 2017.