Tuesday, February 28, 2023

ETFs / Mutual Funds

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.

http://fundresearch.fidelity.com/annuities/category-performance-annual-total-returns-quarterly/FPRAI?refann=005

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

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