Disclaimer: All my books and views are for educational purposes
only. Consult your financial advisors before taking any actions. All the
links are the opinions of the authors, not mine. I am not responsible
for any errors and/or opinions. All information and prices are subject
to change without notice.
Appendix 2 - ETFs / Mutual Funds
What is an ETF
ETFs have basic differences from mutual funds: 1. Lower management expenses, 2. Trade ETFs same as stocks, and 3. Usually more diversified but not more selective than the related mutual funds such as NOBL vs FRDPX.
The major classifications of ETFs are 1. Simulating an index such as SPY, QQQ and DIA, 2. Simulating a sector such as XLE and SOXX, 3. Simulating an asset class such as GLD and SLV, 4. Simulating a country or a group of countries such as EWC and FXI, 5. Managed by a manager(s) such as ARKK, 6. Betting a market or sector to go down such as SH and PSQ, and 7. Leveraged (not recommended for beginners).
Fidelity: Index ETFs (https://www.fidelity.com/etfs/overview).
Wikipedia on ETF (http://en.wikipedia.org/wiki/Exchange-traded_fund).
List of ETFs
ETF database (Recommended): http://etfdb.com/
ETF Bloomberg: http://www.bloomberg.com/markets/etfs/
ETF Trends: http://www.etftrends.com/
A list of ETFs. Seeking Alpha.
http://etf.stock-encyclopedia.com/category/)
A list of contra ETFs (or bear ETFs)
http://www.tradermike.net/inverse-short-etfs-bearish-etf-funds/
Misc.: ETFGuide, ETFReplay
Fidelity low-cost index funds: https://www.youtube.com/watch?v=zpKi4_IJvlY
Fidelity Annuity funds with performance data.
ETFs vs mutual funds; https://www.youtube.com/watch?v=Vmz0CzlQvHk
Three ETFs: https://www.youtube.com/watch?v=MVi2RhpffuU
Other resources
Most subscription services offer research on ETFs. IBD has a strategy dedicated to ETFs and so does AAII to name a couple. Seeking Alpha has extensive resources for ETF including an ETF screener and investing ideas. So is ETFdb.
Not all ETFs are created equal
Check their performances and their expenses.
When to use or not to use ETFs
I prefer sector mutual funds in some industries, as they have many bad stocks such as drug industry, banks, miners and insurers. Most mutual funds cannot time the market.
When you believe a sector is heading up (or contra ETF for heading down), but you do not have time to do research on specific stocks, buy an ETF for the sector; it is same for the market.
Half ETF
Taking out half of the stocks that score below the average in an index ETF could beat the same full ETF itself. I call it HETF (half the ETF). You heard it here first.
To illustrate, sort the expected P/E (not including stocks with negative earnings) in ascending order and only include the stocks on the first half. Add more fundamental metrics. It will take a few minutes.
Disadvantages of ETFs
· When you have two stocks in a sector ETF one good one and one bad one, the ETF treats them the same. Stock pickers would buy the one that has a better appreciation potential.
· Sometimes the return could be misleading due to stock rotation. To illustrate this, on August 29, 2012, SHLD was replaced by LYB in a sector fund. SHLD was down by 4% and LYB was up by 4% primarily due to the switch. Unless you sell and buy at the right time (which is impossible), your return would not match the ETF’s returns due to the replacement.
· Ensure the performance matches the corresponding index; it is hard due to excluding dividends.
Advantages of ETFs
· We have demonstrated that you can beat the market by using market timing. Between 2000 and Nov., 2013, you only exit and reenter the market 3 times and the result is astonishing.
· It is easy to rotate a sector vs. buying/selling all of the stocks in this sector. Rotating a sector is the same as trading a stock.
· The risk is spread out, and your portfolio is diversified especially for a market ETF or buying three or more ETFs in different sectors.
· Periodically the bad stocks in most funds are replaced by better stocks.
· Eliminate the time in researching stocks.
Leveraged ETFs
I do not recommend them. Some are 2x, 3x and even higher. They’re too risky for beginners. However, when you are very sure or your tested strategy has very low drawdown, you may want to use them to improve performance. Most leveraged ETFs and contra ETFs have higher fees.
My basic ETF tables
I include some contra ETFs, mutual funds and Fidelity’s annuity. Some of these may be interesting to you. Most Vanguard’s ETFs have lower fees.
ETFs and funds come and go. Some ideas and classifications are my own interpretation. Refer to ETFdb for updated information. Not responsible for any error. Check out the ETF or fund before you take any action.
I prefer VFINX over SPY for the lower fees; both simulate the S&P 500 index. The stocks in the ETF can be either equally weighted or weighted by market caps. The latter is more like using momentum strategy, as the rising stocks usually have larger market caps. The index usually kicks out some poor-performing stocks and replaced them with better stocks. These ETFs are suited for long-term investing without constant reviews.
Table by market cap:
|
Category |
ETF |
Mutual Funds |
Fidelity’s Annuity |
Contra ETF |
Alternate
|
|
Size: |
|
|
|
|
|
|
Large Cap |
DIA |
|
|
DOG |
|
|
|
SPY |
|
|
SH |
VOO VFINX RSP FXAIX |
|
|
QQQ |
|
|
PSQ |
FNCMX |
|
|
RYH |
|
|
|
|
|
Blend |
IWD |
BEQGX |
|
|
|
|
Growth |
SPYG |
FBGRX |
|
|
FSPGX |
|
Value |
SPYV |
DOGGX |
|
|
FLCOX |
|
Dividend |
NOBL |
FRDPX |
|
|
|
|
|
VYM |
|
|
|
|
|
|
|
|
|
|
|
|
Mid Cap |
|
|
FNBSC |
MYY |
|
|
Blend |
MDY |
VSEQX |
|
|
|
|
Growth |
|
STDIX |
|
|
|
|
|
|
BPTRX |
|
|
|
|
Value |
|
FSMVX |
|
|
|
|
|
|
|
|
|
|
|
Small Cap |
|
|
FPRGC |
SBB |
FSSNX |
|
Blend |
IWM |
HDPSX |
|
|
|
|
Growth |
|
PRDSX |
|
|
FECGX |
|
Value |
|
SKSEX |
|
|
FISVX |
|
|
|
|
|
|
|
|
Micro |
IWC |
|
|
|
|
|
|
|
|
|
|
|
|
Multi |
|
|
|
|
|
|
Blend |
|
VDEOX |
|
|
|
|
Growth |
|
VHCOX |
|
|
|
|
Value |
|
TCLCX |
|
|
|
|
Total |
|
|
|
|
FSKAX VTI |
|
Bond |
|
|
|
|
|
|
Long Term (20) |
VLV |
BTTTX |
|
TBF |
|
|
Mid Term (7 – 10) |
VCIT |
FSTGX |
|
|
|
|
Short Term (1 – 3 yrs.) |
VCSH |
THOPX |
|
|
|
|
Total |
BOND |
PONDX |
|
|
|
|
Corp Invest Grade |
VCIT |
NTHEX |
|
|
|
|
High Yield (junk) |
PHB |
SPHIX |
|
|
|
|
Muni |
MUB |
Check state |
|
|
|
|
|
|
|
|
|
|
|
Special situation |
|
|
|
|
|
|
Buy back |
PKW |
|
|
|
|
|
|
|
|
|
|
|
Table by sectors:
|
Sector |
ETF |
Mutual Funds |
Fidelity’s Annuity |
|
Banking1 |
|
FSRBK |
|
|
Regional |
IAT |
|
|
|
Biotech |
IBB |
FBIOX |
|
|
|
XBI |
Large |
|
|
Consumer Dis.
|
XLY |
FSCPX |
FVHAC |
|
Consumer Staple |
XLP |
FDFAX |
FCSAC |
|
Defense + Aero |
PPA |
|
|
|
Finance |
KIE |
FIDSX |
FONNC |
|
|
IYF |
|
|
|
Energy |
XLE |
FSENX |
FJLLC |
|
Energy Service |
|
FSESX |
|
|
Farm |
DBA |
|
|
|
Gold |
GLD |
FSAGX |
BAR |
|
Gold Miner |
GDX |
VGPMX |
|
|
Health Care |
IYH |
FSPHX |
FPDRC |
|
|
VHT |
VGHCX |
|
|
House Builder |
ITB |
FSHOX |
|
|
Industrial |
IYJ |
FCYIX |
FBALC |
|
|
|
|
|
|
Material |
VAW |
FSDPX |
GSG |
|
|
IYM |
|
|
|
Natural Gas |
UNG |
|
|
|
Oil |
USO |
|
|
|
Oil Service |
OIH |
FSESX |
|
|
Oil Exploration |
XOP |
|
|
|
Real Estate |
VNQ |
FRIFX |
FFWLC |
|
REIT |
VNQ |
|
|
|
|
|
|
|
|
Retail |
RTH |
FSRPX |
|
|
|
XRT |
|
|
|
Regional bank |
KRE |
FSRBX |
|
|
|
|
|
|
|
Semi Conduct |
SMH |
|
|
|
Software |
XSW |
FSCSX |
|
|
|
IGV |
|
|
|
Technology |
XLK |
FSPTX |
FYENC |
|
|
FDN |
FBSOX |
|
|
|
|
ROGSX |
|
|
|
|
|
|
|
Telecomm. |
VOX |
FSTCX |
FVTAC |
|
Transport |
XTN |
|
|
|
|
IYT |
|
|
|
Utilities |
XLU |
FSUTX |
FKMSC |
|
|
|
|
|
|
Wireless |
|
FWRLX |
|
Footnote. 1 Also check Finance.
Table by countries outside the USA:
|
Country |
ETF |
Mutual Funds |
Fidelity’s Annuity |
Alternate |
|
Australia |
EWA |
|
|
|
|
Brazil |
EWZ |
|
|
|
|
Canada |
EWC |
FICDX |
|
|
|
China |
FXI |
FHKCX |
|
|
|
EAFE |
EFA |
|
|
|
|
Emerging |
VWO |
FEMEX |
FEMAC |
FPADX |
|
Europe |
VGK |
FIEUX |
|
|
|
Global |
KXI |
PGVFX |
|
|
|
Greece |
GREK |
|
|
|
|
India |
INDY |
MINDX |
|
|
|
Indonesia |
EIDO |
|
|
|
|
Latin America |
ILF |
FLATX |
|
|
|
Nordic |
|
FNORX |
|
|
|
|
|
|
|
|
|
Hong Kong |
EWH |
|
|
|
|
Japan |
EWJ |
FJPNX |
|
|
|
S. Africa |
EZA |
|
|
|
|
S. Korea |
EWY |
MAKOX |
|
|
|
Singapore |
EWS |
|
|
|
|
Taiwan |
EWT |
|
|
|
|
Turkey |
TUR |
|
|
|
|
United Kingdom |
EWU |
|
|
|
|
Foreign: |
|
|
|
|
|
Combination |
|
|
|
|
|
Intern. Div. |
IDV |
|
|
FTIHX |
|
Small Cap |
SCZ |
|
|
|
|
Value |
EFV |
|
|
|
|
Europe |
VGK |
|
|
|
|
|
|
|
|
|
#Filler: Honey, my book can play music.
https://www.youtube.com/watch?v=HxGT5z6d-GA&list=PLMZa6mP7jZ2b1otqG4tfbgZpLEdh6YiNF
