Tag Archives: $TDIV

ETF News

These ETFs Could Make You The Next Warren Buffett

Leave a comment

MarketsMuse blog update profiles the best ETFs to invest in according to Zacks Equity Research to become the next Warren Buffett. The ETFs range from technology, to financial, to consumer. This MarketsMuse update is courtesy of Zacks Equity Research article, “Follow Warren Buffett with These Stocks and ETFs“, with an excerpt below. 

Everybody dreams of becoming rich and famous like Warren Buffett, Carl Icahn, Daniel Loeb and David Tepper. After all, these Wall Street gurus have successfully put their money in the right place and continued to reap huge returns.

Buffett’s Berkshire Hathaway has enjoyed an average growth rate of about 20% annually. Furthermore, Berkshire Hathaway has added more than 104% over the last five years that is better than the gain of over 94% from the broader market ETF SPDR S&P 500 ETF (SPY) during the same timeframe.

Thanks to this achievement, following billionaires’ investment strategies is now a fad these days. While investing in Berkshire is always a good way of following Buffett, who is commonly known as The Oracle of Omaha, there are numerous other ways to reproduce this stock market veteran’s investment theme and jazz up one’s portfolio.

Normally, Buffett takes interest in companies trading below what he believes is their intrinsic value.He aims long-term outperformance and apparently ignores short-term downturns. We have analyzed a few stocks that remain Buffett’s favorites and highlight the related ETFs for investors who want to follow this investment veteran.

The ETFs that Zacks Equity Research recommend to invest in to follow in Warren Buffett’s footsteps are as follows:

  • iShares U.S. Financial Services ETF (IYG)
  • SPDR Consumer Staples Select Sector ETF(XLP)
  • Market Vectors Retail ETF(RTH)
  • Consumer Staples ETF (VDC)
  • NASDAQ Technology Dividend Index Fund (TDIV)
  • Direxion iBillionaire Index ETF (IBLN)
  • Validea Market Legends ETF (VALX)
  •  Global X Guru Holdings Index ETF (GURU)

To read more about why Zacks Equity Research named these ETFs the best to be like Warren Buffett, click here.

ETF News

Beware of Index Funds That Aren’t

Leave a comment

wsjlogoCourtesy of Michael Pollock, Wall Street Journal

Index funds aren’t always what you think they are. And your innocence could cost you.

To most investors, of course, index funds are passive investments, providing returns that basically mirror the market they are designed to follow. They charge low fees and carry no hidden costs.

But the old definition is starting to change. Unlike simpler, earlier generations of index and exchange-traded funds, new variations are morphing into products that risk putting many investors afoul of the old rule about not investing in things you don’t understand.

As more money flows toward indexing, some fund firms are trying to capture a share of it by creating complex ETFs that blend active management and indexing. The fees charged by some of these funds can be several times those charged by traditional index funds. And, because they sometimes specialize in very narrowly defined, less-active markets, they can wrack up hidden trading costs.

Consider one newer, complex index fund, IQ Hedge Multi-Strategy Tracker, a four-year-old ETF from IndexIQ Advisors LLC that tries to duplicate the returns of hedge-fund investments. For example, when hedge funds go “short” in a certain market, betting that prices will decline, IQ Hedge mimics that activity by taking a short position in an ETF that focuses on that market. Hedge funds follow lots of complex strategies in many different markets, however, and IQ Hedge tries to copy many of them simultaneously.

It requires considerable expertise to know how to use such an index fund effectively in a diversified portfolio. “Investors who aren’t sophisticated in sector rotation and asset allocation might be making a mistake to invest in some of these new, complex products without understanding what’s inside each fund,” says Anthony Hohmann, who oversees ETF analytical products at S&P Capital IQ, a unit of McGraw-Hill Cos.

That doesn’t mean the newer funds aren’t worth looking at. But before you buy, here are some things to consider.

For the balance of the WSJ article, please click here