For Immediate Release
Chicago, IL- September 16, 2015 – Today, Zacks Investment Ideas feature highlights Features: SPDR S&P Dividend ETF (SDY), Market Vectors Morningstar Wide Moat ETF (MOAT), iShares Exponential Technologies ETF (XT), Cambria Shareholder Yield ETF (SYLD) and Guggenheim Spin-Off ETF (CSD).
5 ETFs to Buy & Hold for the Next 5 Years
U.S stocks have been extremely shaky lately and with Federal Reserve uncertainty hanging over the market, the near term may continue to be rocky. Add in emerging market worries, general China concerns, and lackluster wage growth, and we could be in for a rocky stretch right now.
In times like these, it can be very useful to look past the current turmoil and to consider investments that will be solid not just this year, but five years out as well. In the interest of taking this longer view, consider a few of the ETFs below which could make for great selections for investors who are seeking buy-and-hold type investments in this turbulent time:
SPDR S&P Dividend ETF ( SDY )
Investors in it for the long haul probably want to take a look at some stocks which have proven to be great dividend payers over decades. Fortunately this is easy to find in the ETF world by looking at any number of the ‘dividend aristocrat’ funds current on the market. These look at stocks that have been consistently raising dividends year after year for decades, making them extremely promising choices for income-focused investors.
While there are a number of choices on this list, let’s look at SDY from SPDR today. This fund follows the S&P High Yield Dividend Aristocrats Index which holds 100 stocks in its basket. The focus here is on dividend payers which have raised dividends for at least 20 consecutive years (read 5 Dividend ETFs for Growth ).
Financials take the biggest chunk here while staples and industrials round out the top three, though no single company makes up more than 3% of the total. The yield is a solid but uninspiring 2.7%, but you know you will get a list of great companies with impressive track records by buying into SDY.
Market Vectors Morningstar Wide Moat ETF ( MOAT )
If you are looking for companies that can stand the test of time, it might be a good idea to look to ‘wide moat’ stocks. These companies have built up defensible competitive advantages that make it very difficult for others to unseat them. This can include high switching costs, low cost provider, or network effects, and it can give some firms a huge edge.
MOAT looks to invest in a basket of 20 of these so-called ‘wide moat’ securities in its portfolio. The list includes a number of well-known names including Google, Harley-Davidson, and Hershey to name a few, though there is wide diversity on the list. In fact, five sectors receive at least 10% of the total assets each (see all the Total Market ETFs here ).
The fund is a bit on the pricey side at 49 basis points a year in fees while its yield isn’t too impressive at 1.7%. However, if you are looking for durable companies which have the potential to stand the test of time, this could be an ETF worth a closer look.
iShares Exponential Technologies ETF ( XT )
You can’t deny the importance of technology to today’s economy and companies in this ETF look to benefit more than most from this transformation. That is because not only do they develop a specific breakthrough, but they are also taking advantage of other technological breakthroughs to give them extra bang for their buck. Examples of this include biotech companies which are on the cutting edge in the health world, but are also benefiting from the revolution in big data as well.
As you might expect, this is a tech heavy product as the sector accounts for a plurality of assets in the ETF. However, tech makes up a respectable 30% followed by 12% in telecoms and 10% in industrials so there is decent sector diversity in this well spread out ETF (see 13 Best and Most Interesting ETFs to Launch in the First Half of 2015 ).
The revolution in these types of stocks looks to continue over the next few years and there is definitely more room for growth in this space. And while it will be volatile, this is definitely an area of the global economy that you want to have at least some exposure to over the long haul.
Cambria Shareholder Yield ETF ( SYLD )
For a well-rounded approach to broad market investing, looking at companies which are doing a great job of returning free cash flow to their shareholders is a sound strategy. This approach makes sure that shareholders are well taken care of and it insures that management is well-disciplined as well.
This can be done by investing in SYLD an ETF that holds 100 stocks which pay cash dividends, engage in net share repurchases, and are paying down debt on their balance sheets. This approach results in an ETF that has over 80% of its assets in large cap stocks, while financials, consumer, and tech each make up for 15% of the portfolio (also see Cambria Launches Foreign Shareholder Yield ETF ).
This technique could be the go-to strategy for some investors seeking a holistic approach to investing over the next few years as it is a value centric investing style that looks to take into account how important share repurchases and other factors have become over the past few years. And with its diversified holdings lineup, this could definitely be a core holding for some investors seeking both safety and diversity in their portfolios in the medium term.
Guggenheim Spin-Off ETF ( CSD )
Spin-offs are when a division of a company is broken off as a separate business independent of the former parent company. These are often overlooked by investors in favor of their sexier cousins, IPOs, instead. However, spin-offs can hold real promise for investors as these standalone companies can now focus on projects which are important to them and do not have to worry about a parent company that may or may not have their best interests at heart.
CSD buys a basket of these types of spin-off companies, holding about 40 stocks in total, tracking companies that have been spun-off in the past 30 months. Financials and consumer discretionary each account for over 20% of the assets, while tech and health care make up more than 16% each (see 5 ETFs for Your 2015 IRA Contribution ).
This ETF has struggled in the YTD period as it has underperformed the overall market, however, its longer term performance is stellar. In fact, over the past 5 years it has outperformed the S&P 500 by over 20%, making it an interesting choice for investors in for long time periods.
Things may look uncertain right now, but once China gets its act together and the Federal Reserve gets back to a more sustainable interest rate policy, the markets will smooth out. However, this could take a bit of time and in the interim, we may see more rocky trading dead ahead.
That is why it is important to at least keep part of your portfolio laser-focused on long-term investing that is unaffected by the short term swings of the market, and there will definitely be plenty in the near term. So consider any of the above ETFs as ones that you can be confident putting in your portfolio not just now, but over the next several years as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
These top breakout stocks to buy are pushing higher to fresh highs nearly every day. You can hop on for a quick profit while these stocks look for a new fair value. With the Zacks Rank you've got the momentum of the analysts on Wall Street, with the chart you have price momentum, and with me you get all the momentum stock strategy.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today. Find out What is happening in the stock market today on zacks.com.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPDR-SP DIV ETF (SDY): ETF Research Reports
MKT VEC-WIDE MT (MOAT): ETF Research Reports
ISHARS-EXP TECH (XT): ETF Research Reports
CAMBRIA SH YLD (SYLD): ETF Research Reports
GUGG-SPIN-OFF (CSD): ETF Research Reports
To read this article on Zacks.com click here.