The 2017 market has been defined by momentum-driven trends in high growth sectors such as technology and consumer discretionary stocks. The pervasive strength can be attributed to a cadre of household names that have made impressive new highs this year. Apple, Amazon, Facebook, Google, Netflix and others have crushed traditional broad-market benchmarks as their stock prices surge and volatility remains muted.
As these market forces exert themselves, the concomitant effect is that conventional value stocks have shown a far more muted pace. Companies in the energy, financial, utility, and consumer staples sectors have lagged the major indexes as investors focus on chasing the strongest performers of the year.
Classifying stocks as either growth or value is one of the oldest and most studied fundamental investment pillars. This process traditionally involves the analysis of various balance sheet statistics to determine a company’s intrinsic net worth relative to its peers and historical benchmarks.
Being that “value” is such a sought-after characteristic, it’s no surprise that over 50 exchange-traded funds are dedicated to the pursuit. The largest of which include the iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV). Read more
The “fund of funds” style is a portfolio tactic that has been used successfully for many large investment companies. Think about those target-date or target-risk funds in your 401(k). They are essentially a single mutual fund filled with 8-12 underlying funds to create a highly diversified investment strategy using varying asset classes.
It was initially assumed that this same dynamic would be readily embraced in the exchange-traded fund format as well. However, after several failed attempts, it’s becoming apparent that ETF investors want certain attributes within a “fund of fund” strategy that they can’t find elsewhere. The following three examples highlight the largest of this breed and how they have developed over the last decade.
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.
The first 100 days of Donald Trump’s presidency has been good for the stock market. Whether you agree with his policies or not, there is optimism for the future of the global economy that is being reflected in the recent price action.
Now, of course, that doesn’t mean we are going to see a straight path of gains for the next four years. There are going to be a myriad of stumbling blocks, uncertainty, and possibly even a bear market that will creep up when we least expect it. Those declines will be opportunities for those who are ready to take advantage with cash on the sidelines and a well-tuned watch list of solid funds to buy. Read more