2. +
of this presentation is to inform the interested
viewer of possibilities to diversify their portfolio through exchange
traded funds. Such funds may be purchased through a broker
registered with the National Association of Securities Dealers
(NASD). Many investors choose to purchase such securities
through an online brokerage account, but you may also visit a
brick and mortar brokerage house. An ETF is similar to a mutual
fund in that it may hold many individual securities. Unlike a
mutual fund, it is traded like a common stock. This usually
involves paying a brokerage fee to buy and sell an ETF. However,
ETFs tend to have slightly lower annual fees than mutual funds.
3. +
Exchange traded funds (ETFs) are identified in the following
slides by the ticker symbol in the upper, left corner. The present
author encourages anyone thinking of investing in any of these
ETFs to enter the ticket symbol in your favorite investing research
site and/or discuss with your broker/financial planner. Seriously,
the names of these ETFs have been omitted to encourage you to
do your homework!
The author confesses a certain bias towards companies that offer
dividends. Therefore, most of the stock ETFs to follow pay
dividends.
4. + ETFs are presented under three categories:
(1) Equity securities, in other words, common stocks;
(2) Bonds and bond-related securities; and
(3) Alternative securities such as real estate, master
limited partnerships, private equity, etc.
For each ETF you will find dividend yield, market price
performance (excluding dividends) for up to three time frames,
and the net expense ratio (basically an annual fee charged by the
ETF manager). Hopefully, you will find this information stimulating
in your search for investment opportunities.
Disclaimer: Information contained in this presentation is not intended as
investment or legal advice, and is given for informational and educational
purposes only. Any financial gain or loss associated with use of this
material is strictly the responsibility of the user of this information. The
present author may be long (own) any or all of the ETFs mentioned.
Information contained in this presentation is believed to be current as of
June 22, 2014. The user of this information assumes responsibility for
any errors, omissions, or inaccuracies.
6. +
DVY
Invests in US stocks with a history of
increasing dividends.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
2.96% 20.31% 20.44% 7.07% 0.40%
Notes: Distribution yield is the annual dividend rate.
Market return reflects annualized changes in stock
price not including dividends. Net expense ratio is the
annual fee assessed by the ETF company.
7. +
QQQ
100 biggest companies on NASDAQ
exchange. Over-weighted with tech stocks.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
1.44% 26.64% 22.10% 10.41% 0.20%
8. +
PJP
A selection of 30 pharmaceutical stocks.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.38% 40.26% 33.44% NA 0.63%
9. +
PTH
A broader basket of health-care stocks than
the aforementioned PJP.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.33% 13.67% 20.74% NA 0.65%
11. +
XLE
Consumable fuels such as oil and gas, and
related equipment and services.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
1.68% 20.66% 15.05% 14.12% 0.16%
12. +
FDD
A selection of European dividend-paying
stocks.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
3.51% 32.15% 11.52% NA 0.60%
13. +
VWO
Stocks from emerging markets (e.g., China,
Taiwan, Brazil) If you really have nerves of
steel look up FM, an ETF for “frontier markets”
such as Kuwait and Nigeria.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
2.77% 4.72% 7.59% NA 0.15%
15. +
BND
An ETF that invests in corporate bonds and
treasury securities.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
2.53% 2.60% 4.72% NA 0.08%
16. +
JNK
Invests in so-called “junk bonds.” They pay a
higher coupon rate to compensate for greater
risk of default.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
5.79% 8.61% 12.66% NA 0.40
17. +
LQD
Invests in investment grade corporate bonds.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
3.58% 5.32% 8.72% 5.96% 0.15%
18. +
GNMA
Buys Government National Mortgage
Association mortgage-backed obligations.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.88% 1.99% NA NA 0.25%
19. +
TIP
An EFT that is comprised of at least 95%
government bonds, primarily treasury inflation
protected securities..
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.98% 0.01% 5.32% 5.04% 0.20%
20. +
SPFF
This ETF is composed of high-yielding
preferred stocks in the United States and
Canada. Preferred stocks tend to behave
more like bonds than common stock in terms
of their dividends. In case of bankruptcy,
preferred stock holders get paid after bond-
holders but before common stock-holders.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
7.00% 7.66% NA NA 0.58%
21. +
CWB
Invests in issues of convertible bonds. In
theory, these securities might be converted to
common stock at some point in time.
Something for the ETF manager to take care
of.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
3.30% 16.98% 14.57% NA 0.40%
22. +
So-called “Alternative ETFs”
The present author believes some of them should be
in most portfolios to provide better diversification than
can be obtained though common stocks and bonds
alone.
23. +
VNQ
An ETF composed of real estate investment
trusts (REITs). This is a broad-based ETF that
owns companies holding and sometimes
managing commercial and residential real
estate, self-storage facilities, and even health-
care facilities.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
2.72% 9.90% 22.91% NA 0.10%
24. +
PSP
Here’s a way to invest in private equity
securities without the high initial cost of buying
into an individual firm. This particular ETF
invests in private equity securities on a global
basis. The net expense ratio is high relative to
many other types of ETFs.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
13.98% 19.51% 18.74% NA 2.19%
25. +
AMLP
Invests in Master Limited Partnerships (MLPs)
involved primarily in the transportation of fuels,
specifically pipelines.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
6.03% 11.55% NA NA 0.85%
26. +
DBA
Purchases commodity futures contracts on
agricultural products such as sugar, live cattle,
wheat, corn, hogs, soybeans, coffee, and
cocoa.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.00% 8.71% -0.13% NA 0.85%
27. +
GLD
An ETF that Auric Goldfinger would love; it
holds gold bullion. A play on the price of gold
but might also serve as a hedge against
political uncertainty.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
0.00% -10.07% 4.59% NA 0.40%
28. +
HVPW
This ETF reflects the performance of a
portfolio of exchange-traded put options on
highly volatile U.S. stocks.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
9.45% 2.88% NA NA 0.95
29. +
CSM
This ETF may take long or short positions on
any of the 500 largest U.S. companies by
market capitalization.
Distribution
Yield
1 year
market
return
5 year
market
return
10 year
market
return
Net
expense
ratio
1.32% 23.42% NA NA 0.45%
30. +
Summary
The proceeding slides presented many ideas to stimulate
investment thinking. Please keep in mind that good portfolio
construction involves many factors such as: a person’s age and
resources, tolerance for risk, diversification, tax policy, the macro
economic environment, and research.
Many “experts” pay little attention to “alternative” investments and
tend to focus almost exclusively on stocks and bonds. In general,
as a person gets older they recommend owning a lower proportion
of stocks and a greater proportion of bonds. However, in the
current interest rate environment, a person whose portfolio is
overweight bond mutual funds (or bond ETFs) would be crushed
by a sharp increase in interest rates as bond prices fall when
interest rates rise. One could make an argument here for buying
individual bonds and holding them to maturity to avoid loss of
principal.
31. +
Questions and Comments
The author welcomes questions and comments. Feel free to
contact him at the email address below.
colortini@gmx.com