The table below is a list of the 25-top performing ETFs over the last ten years. As you will see, the majority of the Exchange Traded Funds on this list produced returns of 15% or more on an annualized basis, with the top ETF returning more than 19% a year on average over the past decade. That would equate to roughly a 250% return before any dividends or fees.
A weird thing happens when investors start seeing signs of a recession or just start convincing themselves that a recession is inevitable and coming soon; interest rates begin to fall, which means bond yields begin to drop. Most investors are told when they start investing that stocks are risky, but they offer better long-term growth, while bonds are safer, but they don’t offer investors as much potential growth.
While these statements may be true during certain situations, they certainly don’t always hold true. Sometimes, stocks may be both less risky and offer higher growth than bonds. I personally believe now be may one of those times.
As things sit now, bonds are offering rather low yields. The three-month treasury is paying 1.78%, the 12-month treasury is paying 1.75%, while the even longer five-year treasury is only offering a yield of 1.56%. The ten-year treasury is at 1.68%, and the 30-year treasury is sitting at 2.13%. These returns are hardly likely to keep up with inflation over those longer periods. Buying an investment that may just keep up with inflation seems somewhat risky to me.
Even the bond ETFs that have performed well year-to-date and pay yields to their investors aren’t currently offering anything much better than what investors can get from Treasuries. The Vanguard Long-Term Corporate Bond ETF (VCLT) which is up 21% year-to-date is offering one of the best yields at 3.5%. But this ETF is rather risky considering if, and when interest rates turn around, this fund will get hit.
On the other hand, certain stocks are currently offering higher yields, while also offering the chance for stock price appreciation, regardless of which way interest rates run. Let’s take a look at a few of my person favorites equity Exchange Traded Funds, which offer both growth and healthy, reliable yields. Continue reading "Dividend Stocks Yielding More Than Bonds"
Recent studies of emerging markets show their investment opportunities may be greater than most investors realize. One study believes that by 2020 the aggregate GDP of emerging markets will overtake that of developed economies around the world. Another one has the number of global consumers hitting 1.8 billion by 2025, with the majority of them living in emerging markets. Lastly, it is believed consumer spending in emerging markets will grow three times faster than that of developed markets in the coming years.
All three of these stats indicate there could soon be a huge growth opportunity in developing markets around the world. But there are a lot of emerging market ETFs that are down more than 9% year-to-date while the SPDR S&P 500 ETF (SPY) is up more than 10% and hitting new all-time highs. With that being said, many experts are beginning to grow weary of U.S. equities as we have now set a new record regarding the length of our current bull-market and valuations appear to be stretched.
When we take all of this into consideration, moving money to emerging market funds now may turn out to be a good long-term asset allocation play. So, let's take a look at a few funds which look appealing due to their rough 2018.
The first two are the Vanguard FTSE Emerging Markets ETF (VWO) and its direct competitor the Schwab Emerging Markets Equity ETF (SCHE). Both of these funds are large, liquid and have low fee’s; 0.14% and 0.13% respectively. They also both don’t consider South Korea an emerging market but hold positions based in Hong Kong, Taiwan, India, China, South Africa, Brazil, Russia, and Mexico to name the top 8 countries based on holdings. Both have an index weighting based on market cap and have a weighted market cap of around $80 billion, meaning you’re getting great foreign large-cap exposure. Continue reading "Emerging Market ETFs Could Offer Great Opportunities"
SPDR S&P 500 ETF (SPY), Schwab U.S Broad Market ETF (SCHB), State Street Corporation (STT), Invesco (IVZ), Wisdom Tree (WETF), BlackRock (BLK), ETF investing, ETF's, benefits of etfs,
But first, maybe you are wondering what an ETF operator does and how do they make money?
Plan and simply an ETF operator sponsors and runs an exchange traded fund. ETF's are either managed or unmanaged. Managed would mean someone is actually deciding which investments to hold in the ETF in order to gain the highest return. Unmanaged ETF's are ones that simply track a corresponding index; such is the case with the SPDR S&P 500 ETF (SPY) which tracks S&P 500.
An ETF operator makes its money by charging a fee to manage the ETF. These fees are usually displayed as a percentage. These fees or the annual expense ratio, as it is often called, can range in amounts from as little as 0.04% which is the case with the Schwab U.S Broad Market ETF (SCHB), up to more than 3% with some of the exotic funds. Managed funds always carry a higher expense ratio as they require daily monitoring by the managers. Whereas with unmanaged funds a manager only has to make changes when the index the fund tracks changes, which is not usually very often. Think of it this way, managed means constant attention baby-sitting while unmanaged means no to little baby-sitting and the more baby-sitting, the higher the price.
So now that we know how they operate and were the revenue comes from let's take a look at a few ETF operators. Continue reading "4 Companies You Can Own That Operate Your Favorite ETFs"
SPDR S&P 500 ETF (SPY) is one of, if not the largest ETF's based on net asset value, which currently sits at $177 billion. That should though come as no surprise since the ETF mimics the S&P 500 and is quite frankly the easiest way for investors to diversify their portfolio in stocks, while taking on no more risk than necessary. I often recommended this to others and refer to it as the best one stop shop for investors, regardless of their goals.
But recently, we have been seeing large amounts of money moving out of SPY. January 20th nearly $4 billion was pulled out, during two days, January 28th and 29th, more than $5 billion was removed, $2.4 billion on February 20th, another $2.3 billion on March 20th, another $9 billion from March 26th to the 30th, April 20th another $4 billion, from April 28th to May 1st $8 billion, and May 19th $3.3 billion was pulled out. Continue reading "Massive Amounts Of Money Are Leaving The US For Europe"