Five ETFs you can buy and forget

 

More and more investors are turning to exchange-traded funds for their investments. There are many reasons why ETFs have become so popular, and you they come in a wide range of options.

The primary advantage of an ETF is that, in most cases, they are highly diversified. For example, you could buy shares of SPDR S&P 500 ETF (SPY), which tracks the performance of the overall S&P 500. The key here is that your money is spread across the stocks in the S&P 500, so you do not have to track each and every stock, and should one stock run into trouble, it will not result in a huge drop in the ETF since there are so many other names to help balance out the weakness.

Diversity is the primary key, but another reason is how easy they are to buy and sell. Instead of having to buy a basket of stocks, you simply buy the ETF. Few commissions, and a lot less to keep track of. It is very difficult to follow a basket of stocks and stay on top of diversified stock portfolio, but for ETFs you only have to keep up with the sector it covers, or the overall market if you are in index-based funds such as SPY.

ETFs are simple, highly liquid, and require less tracking. If this sounds good to you, we have five ETFs that are perfect candidates to buy and forget. Let’s take a closer look.

PowerShares QQQ ETF

The technology sector has been one of the strongest sectors in recent years, and the NASDAQ has risen to record highs as a result. The PowerShares QQQ ETF (QQQ) is designed to track the performance of the overall NASDAQ, so if you are bullish regarding the overall health of the market, then QQQ is a great way to get into a diversified group of stocks without having to monitor any one particular stock too closely. Technology is constantly evolving, and tech fads come and go, so while the upside in tech stocks can be huge, volatility can arise at any moment to today’s hot tech stocks. The long term outlook for the tech sector is bright, so you want to have some money invested in the sector, but if you are concerned about possible shifts in sector leadership then QQQ is the perfect ETF to buy and forget.

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Chart courtesy of www.stockcharts.com

Vanguard Total Stock Market ETF

For investors who want to play the market, but are not sure which index to track, a good option is the Vanguard Total Stock Market ETF (VTI). VTI allows you to hedge your investment over the entire domestic stock market. All sectors are included, and stocks are followed regardless of market cap. It’s a balanced fund, and with over 3,500 stocks included, it is one of the most diversified ETFs you can find. With all the major indexes trading at record highs, it is no surprise that VTI has been trending steadily higher, and should continue to build on its recent gains as long as the overall market does not run into selling pressure. For investors that believe in the long-term prospects for the market, but are unsure which sectors or indexes to trace, VTI is the perfect ETF to buy and hold forever.

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Chart courtesy of www.stockcharts.com

PowerShares Dividend Achievers ETF

For dividend investors, a great ETF to buy into is the PowerShares Dividend Achievers ETF (PFM). The fund is built to track the performance of the NASDAQ US Broad Dividend AchieversTM Index. Among its top holdings include Exxon Mobil (XOM), Microsoft (MSFT), and Johnson & Johnson (JNJ). All of the stocks in the fund have increased their dividends for at least ten consecutive years, which is a clear indicator of the strength in their capital plans, and provides good assurance that the streaks of increases will continue moving forward. Dividends are a great way to bring income into a portfolio, which makes them attractive regardless of overall economic and market conditions, and stocks with proven track records of dividend increases are very stable and defensive when the markets turn lower.

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Chart courtesy of www.stockcharts.com

SPDR Gold Shares

Gold is an attractive investment because gold is something tangible, and a lot of investors are concerned about the future of fiat currencies. While a lot of investors would love to invest in gold, a lot shy away from the commodity because of the hassle of having to actually buy and sell physical gold, and fear of storing such a commodity in their homes. Investing in the SPDR Gold Shares ETF (GLD) erases those concerns. The ETF is designed to track the performance of gold bullion, so if you are bullish on the long-term outlook for gold, then GLD is the perfect investment vehicle. You can buy the ETF in the open market, and sell your position at any time in the open market. It is very liquid, and there is no need to store the actual gold in your house. GLD is the perfect ETF for investors that have been wanting to bet on gold’s future have yet to jump into the commodity.

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Chart courtesy of www.stockcharts.com

SPDR S&P Regional Banking ETF

The SPDR S&P Regional Banking ETF (KRE) is a play on the strength of regional banks. As interest rates continue to rise, the entire financial sector will benefit, and regional banks really stand to gain. Regional banks make a lot of their profits from their mortgage businesses, and rising rates allow them to widen the spread on the money their borrow and the money they loan out to their customers. KRE made a big move to the upside following last year’s presidential election, but the fund has been stuck in a sideways pattern during the current year, but is currently trading just shy of its all-time high. The Federal Reserve is expected to continue boosting rates at least a couple times in 2018, which will keep strength in the sector and help KRE to build on its recent gains.

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Chart courtesy of www.stockcharts.com

Symbols: GLD KRE PFM QQQ VTI
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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