|Bid||33.89 x 1200|
|Ask||33.90 x 2200|
|Day's Range||33.88 - 34.03|
|52 Week Range||25.93 - 34.13|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||0.96|
|Expense Ratio (net)||0.15%|
Editor's note: This story was previously published in March 2019. It has since been updated and republished.The universe of exchange-traded funds (ETFs) is awash in low-fee products, and the space is growing as issuers reduce their fees to lure investors.Income-seeking investors do not have to pay up to access high-dividend ETFs. In fact, numerous high-dividend ETFs can be inexpensive, which is an important point for income investors looking to keep more of those dividends and a higher share of their invested capital. High-dividend ETFs are often embraced by long-term investors and over the long-term, lower fees can mean better outcomes for investors.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOver the past several years, data confirm that when it comes to adding new assets, the best ETFs are usually those with annual fees of 0.20% or less. Plenty of high-dividend ETFs fit into that category, making it a cost-effective method for thrifty investors to access broad baskets of dividend stocks. * 10 Marijuana Stocks That Could See 100% Gains, If Not More Here are some high-dividend ETFs, with very low fees, for income-minded investors to consider. iShares Core High Dividend ETF (HDV)Source: Shutterstock Expense Ratio: 0.08%, or $8 annually per $10,000 investmentMany high dividend ETFs weight components by yield, a strategy that has some drawbacks. Those disadvantages include vulnerability to rising interest rates and the potential for exposure to financially challenged companies that may have trouble maintaining and growing dividends.The iShares Core High Dividend ETF (NYSEARCA:HDV) has a 12-month dividend yield of 3.23%, which is well above the S&P 500 and 10-year Treasuries. However, this high-dividend ETF follows the Morningstar Dividend Yield Focus Index, which screens companies for financial health, giving the fund a quality look.With an annual fee of just 0.08%, HDV is one of the cheaper high dividend ETFs on the market today. That low fee coupled with its sector allocations make HDV ideal for conservative investors. The healthcare, consumer staples, telecom and utilities sectors, four of HDV's top five sector weights, can all be considered defensive groups. SPDR Portfolio S&P 500 High Dividend ETF (SPYD)Source: Shutterstock Expense Ratio: 0.07%The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) is one of the least expensive dividend ETFs on the market, high dividend or otherwise. The ETF tracks the S&P 500 High Dividend Index, the high-dividend offshoot of the traditional S&P 500.SPYD's yield requirement gives this high-dividend ETF a focused roster of just 80 stocks, but the 12-month dividend yield of 4.5% makes this high-dividend ETF appealing for income investors relative to standard broad market funds. * 10 Undervalued Stocks With Breakout Potential SPYD relies heavily on high-income sectors that have shown historical vulnerability to rising interest rates. The real estate and utilities sectors combine for almost 35% of this high dividend ETF's weight. Invesco Dow Jones Industrial Average Dividend ETF (DJD)Source: Shutterstock Expense Ratio: 0.7%The Invesco Dow Jones Industrial Average Dividend ETF (NYSEARCA:DJD) is a yield-weighted approach to the venerable Dow Jones Industrial Average. What this high-dividend ETF does is weigh the 30 Dow stocks by their trailing 12-month dividend, not price, as the traditional Dow does.DJD's yield focus makes IBM(NYSE:IBM) the high dividend ETF's largest holding. DJD's largest sector weight is technology, and the fund devotes just 11.67% to industrials.While DJD appears to be a high-dividend ETF, the fund offers significant dividend growth potential because many of the Dow's 30 member firms have payout-increase streaks that can be measured in decades. Invesco S&P 500 Quality ETF (SPHQ)Source: Shutterstock Expense Ratio: 0.16%With a distribution rate of just 1.6%, the Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ) does not scream "high dividend ETF." SPHQ's underlying index, the S&P 500 Quality Index, does not even emphasize dividends.Rather, that benchmark focuses on firms "that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio," according to Invesco. While SPHQ is not explicitly a high -dividend fund, reliable, growing dividends are often a hallmark of companies meeting the standards of the quality factor. * 10 Cheap Dividend Stocks to Load Up On With a combined weight of nearly 40% to the technology and consumer services sectors, SPHQ has the feel of a growth ETF, but that means this fund also pairs well with more traditional high-dividend ETFs, such as some of the funds highlighted above. Vanguard High Dividend Yield ETF (VYM)Source: Shutterstock Expense Ratio: 0.06%Home to $22.8 billion in total net assets, the Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is one of the largest dividend ETFs of any variety. It is not unreasonable to believe that VYM's name frames the fund as a high-dividend ETF, but a yield of 3.07% is not alarmingly high.More importantly, VYM is not overly dependent on rate-sensitive sectors. This high-dividend ETF features no real estate exposure and the bond-esque telecom and utilities sectors combine for just 13.3% of VYM's weight.Nearly a quarter of the fund's holdings hail from the industrial and healthcare sectors. Financials, a sector that has been a major driver of S&P 500 dividend growth over the past year, is this high dividend ETF's largest sector exposure at 18.6%. JPMorgan U.S. Dividend ETF (JDIV)Source: Shutterstock Expense Ratio: 0.12%The JPMorgan U.S. Dividend ETF (NYSEARCA:JDIV) is one of the youngest funds on this list, having debuted in late 2017, but it fits the bill as a cost-effective, high-dividend ETF.JDIV "utilizes a rules-based approach that adjusts sector weights based on volatility and yield and selects the highest yielding stocks," according to the issuer. * 10 Best S&P 500 Stocks to Buy For the Rest of 2019 With a 12-month yield of 3.56%, JDIV has high-dividend ETF credentials. JDIV's annual fee of 0.12% is quite low. Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF)Source: Shutterstock Expense Ratio: 0.20%The Xtrackers MSCI EAFE High Dividend Yield Equity ETF (NYSEARCA:HDEF) targets the MSCI EAFE High Dividend Yield Index, a benchmark that is a high-dividend derivative of the widely followed MSCI EAFE Index.While HDEF is a credible name among international high dividend ETFs, the laggard status of European stocks has hindered HDEF in recent months. On the more positive side of the ledger is ex-U.S. dividend growth and valuation opportunities across developed markets, two traits that speak to long-term opportunity with HDEF.As of this writing, Todd Shriber did not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 Shining Silver and Gold Stocks to Buy Right Now * 10 Best S&P 500 Stocks to Buy For the Rest of 2019 * The 7 Best Acquisitions of 2019 The post 7 Inexpensive, High-Dividend ETFs to Buy appeared first on InvestorPlace.
Most investment factors are easy to understand. Value stocks are those names perceived to be trading at discounts to the broader market. Growth stocks are those posting superior earnings and revenue increases, while the low volatility factor offers exposure to equities with favorable volatility traits.When it comes the quality factor, however, there are varying definitions and traits used by investors to assess what constitutes quality."It's likely the factor where opinions are most diverse regarding the definition," according to Factor Research. "Broadly speaking there are qualitative and quantitative evaluations and these are often combined in a scoring model. Criteria like management quality or the soundness of strategy are intuitively appealing, but difficult to verify given a lack of data."InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhile definitions for quality vary, some of the factor's stickier attributes would include companies that are not highly leveraged -- or at the very least if they carrying debt, they have strong credit ratings and interest coverage ratios, strong return on assets (ROA) and return on equity (ROE), modest earnings variability, and solid management teams. Penchants for rewarding investors via buybacks and dividends can also be part of the quality assessment. * 7 Stocks to Buy As They Hit 52-Week Lows Investors wanting to integrate quality into their portfolios are in luck because there plenty of dedicated quality ETFs on the market today. Here are some of the best of breed quality ETFs to consider. iShares Edge MSCI USA Quality Factor ETF (QUAL)Source: PixabayExpense ratio: 0.15% per year, or $15 on a $10,000 investment.Home to $10.55 billion in assets under management, the iShares Edge MSCI USA Quality Factor ETF (CBOE:QUAL) is the king of dedicated quality ETFs. QUAL, which turns six years old next month, tracks the MSCI USA Sector Neutral Quality Index and holds 125 stocks.This ETF's approach to quality is straight forward as it targets "stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage)," according to iShares.Like other factor-based strategies, quality ETFs usually are not required to have overweight exposure to a particular sector or sectors. However, some groups often display more quality intensity than others. When it comes to QUAL, this quality ETF allocates almost half its combined weight to the technology, healthcare and financial services sectors.Quality can also mean lower volatility as highlighted by QUAL's three-year standard deviation of 10.94%, which is lower than the same metric on some other single-factor funds. JPMorgan U.S. Quality Factor ETF (JQUA)Source: Shutterstock Expense ratio: 0.12%The JPMorgan U.S. Quality Factor ETF (NYSEARCA:JQUA) is another dedicated quality ETF and an inexpensive one at that. With an annual fee of just 0.12%, JQUA is one of the cheapest single-factor funds that is not a value or growth strategy. JQUA uses "a rules-based approach that matches Russell 1000 sector weights and selects stocks based on quality and profitability characteristics," according to JPMorgan Asset Management.JQUA holds nearly 230 stocks, giving it a deeper bench than the aforementioned QUAL. Perhaps the biggest advantage of this quality ETF is its robust ROE. At the end of April, JQUA's ROE was 28.36%, or nearly 800 basis points above that of the Russell 1000 Index, according to issuer data. * 7 A-Rated Stocks to Buy Under $10 JQUA allocates about 55% of its combined weight to the technology, financial services and consumer discretionary sectors. Year-to-date, this quality ETF is higher by nearly 14%. SPDR S&P Dividend ETF (SDY)Source: Shutterstock Expense ratio: 0.35%As has been widely noted, dividends are integral to well-balanced portfolios and vital to investors' long-term outcomes. Dividends are also one of the premier quality traits, particularly dependable dividend growth. Hence, the SPDR S&P Dividend ETF (NYSEARCA:SDY) merits a place in this discussion of quality ETFs.SDY, one of the largest domestic dividend ETFs, tracks the S&P High Yield Dividend Aristocrats Index, which requires member firms to have increased payouts for at least 20 consecutive years. Although SDY's components are weighted by yield, this is not a high-yield fund as highlighted by its trailing 12-month dividend yield of 2.37%.The industrial, financial services and consumer staples sectors combine for almost half of SDY's weight, giving it a different sector profile than the aforementioned quality ETFs. With the business cycle in its late innings, some market observers believe quality ETFs will benefit investors."Stretched valuations and slowing growth depict a late cycle environment, but this doesn't mean that investors should abandon equities," said State Street in a recent note. "Focusing on quality stocks with reasonable valuations may mitigate the episodic microbursts of volatility typical of a late-cycle market." WisdomTree U.S. SmallCap Quality Dividend Growth Fund (DGRS)Source: Shutterstock Expense ratio: 0.38%Yes, the WisdomTree U.S. SmallCap Quality Dividend Growth Fund (NASDAQ:DGRS) has "quality" in its name, but this fund is a credible quality ETF for more valid reasons. Notably, DGRS' weighting methodology emphasizes ROA and ROE.Those are important traits with dividend stocks because strong ROA and ROE metrics imply companies not only have the ability to sustain current payouts, but raise those dividends in the future. Using ROA and ROE with small-cap stocks can prove efficacious because many smaller companies take on debt to fuel growth, punishing ROA and ROE along the way."We also know that typically companies that have the highest debt burdens are more acutely exposed to a deceleration in the economy," according to WisdomTree. * 4 Antitrust Tech Stocks to Keep an Eye On Not surprisingly, DGRS outpaced the Russell 2000 Index by more than 450 basis points during the 2018 fourth-quarter market swoon. Although DGRS is a dividend growth strategy, its yield is more than double that of the Russell 2000. Invesco S&P 500 Quality ETF (SPHQ)Source: Shutterstock Expense ratio: 0.15%The Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ) is one of the elder statesmen of the quality ETF group having debuted in late 2005. Age usually should not be a deciding factor when it comes to ETFs, but SPHQ's long track record gives investors willing to do some homework an idea of how the fund has performed across multiple market cycles, good and bad.SPHQ follow the S&P 500 Quality Index. That benchmark is home to 100 S&P 500 members "that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio," according to Invesco.For investors that want to focus on ROE, SPHQ is a quality ETF that makes a lot of sense because its ROE is a stellar 42.70%.That says something about the technology sector because that group accounts for 41.71% of this quality ETF's weight. Healthcare and consumer discretionary names combine for almost 21% of SPHQ's roster.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy As They Hit 52-Week Lows * 4 Antitrust Tech Stocks to Keep an Eye On * 5 Gold and Silver Stocks Touching Intraday Highs Compare Brokers The post 5 Quality ETFs That Qualify for Your Portfolio appeared first on InvestorPlace.
The quality factor has been one of the standout investment factors this year and plenty of exchange traded funds (ETFs) are participating in that trend. Among dedicated quality ETFs, the Invesco S&P 500 Quality ETF (SPHQ) is a 2019 leader. SPHQ, which debuted in late 2005, follows the S&P 500 Quality Index.
The quality factor has been one of the standout investment factors this year and plenty of exchange traded funds (ETFs) are participating in that trend. Among dedicated quality ETFs, the Invesco S&P 500 ...
This month saw many investment professionals gathering for the Inside ETFs conference. The conference features a wide variety of education, advice, and panels on the state of the ETF and investment industry. One of the more interesting facts to come from the conference is that investors are quickly adopting smart-beta ETFs as replacements for underperforming active mutual funds.In fact, according to a Brown Brothers Harriman survey of respondents at the conference, more than one-third highlighted the fact that they purchased a smart-beta ETF to replace an actively managed mutual fund.And you should probably join them.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSmart-beta ETFs use various factors or rules to build-out their portfolios/indexes. Because of this, they blur the line between traditional index investing and active management. The best part is, they are a heck of a lot cheaper than many mutual funds. Thereby, providing better performance. * 7 Healthy Dividend Stocks to Buy for Extra Stability For investors building a portfolio, using smart-beta ETFs could result in better returns and better long-term outcomes. With that, here are five smart-beta ETFs that could find a home in your portfolio and replace your active mutual funds. iShares Edge MSCI Multifactor USA ETF (LRGF)The crux of smart-beta ETFs comes down to their use of factors to develop their portfolios. This includes everything from stocks that exhibit low-volatility or size to those that feature high relative strength or "value." The idea is that honing in on various factors will help a smart-beta fund outperform a regularly weighted index. But, like anything else in the investment world, not every factor will outperform at the same time. Choosing the right one at the right time could be a fool's errand.And that's why the iShares Edge MSCI Multifactor USA ETF (NYSEARCA:LRGF) could be one the best starting places for investors.LRGF tracks the MSCI USA Diversified Multiple-Factor Index. This index combs through large-cap U.S. stocks for the four main determinants of overall success: financially healthy firms, stocks that are inexpensive, smaller companies and trending stocks. Better known in the smart-beta world as quality, value, size, and momentum. LRGF then chooses 150 with the highest scores in each category. What you get is a portfolio of the market's overall best. Current top holdings include Cigna (NYSE:CI) and Marathon Petroleum (NYSE:MPC). * The 10 Best Cheap Stocks to Buy Right Now The proof is in the pudding, the smart-beta ETF is up nearly 30% since its inception back 2015. The best part is, LRGF is dirt cheap at just 0.20% in expenses. That makes it an ideal ETF to own over the longer haul. Vanguard U.S. Liquidity Factor ETF (VFLQ)When it comes to factors, there are countless ETFs that track the big ones like value or size. However, there is one factor that most investors -- and smart-beta ETFs -- ignore. And that would be liquidity.According to Investopedia, liquidity is defined as "the degree to which an asset can be bought or sold in the market without affecting the asset's price." The idea behind the liquidity factor is that those stocks that aren't easily bought and sold can command a premium over those more frequently traded or more liquid equities -- if held for a long enough period. There's plenty of evidence for this.The only smart-beta ETF looking at liquidity is the Vanguard U.S. Liquidity Factor ETF (BATS:VFLQ). VFLQ digs through the Russell 3000 -- which is a total market measure of large-, mid- and small-cap stocks in the U.S. The ETF then looks for the most illiquid stocks in the index based on trading data. The nearly 889 holdings are vastly different make-up than its broader parent.Being less than a year old, it's hard to tell just how the new ETF will do. Likewise, itself is pretty illiquid and features only about $20 million in assets. However, as word gets out about the ignored liquidity factor, the ETF should garner assets in the future. The Vanguard-low expense ratio of just 0.13% won't hurt either. Smart-Beta ETFs To Buy: Goldman Sachs Access High Yield Corporate Bond ETF (GHYB)If there is one area of the market that smart-beta ETFs can really thrive it's in fixed income and bond investing. That's because traditional bond indexes are weighted by the amount of debt issued. So, a firm with the most IOUs will typically be the largest holdings in many bond ETFs. That's kind of counter-intuitive. There's a vast difference in credit quality and the amount of debt owed. And unfortunately, broad bond indexes don't discriminate against "good" debt and those with "bad."This is an even bigger problem when looking at junk bonds and high-yield debt. With their focus on fundamentals and factors, smart-beta ETFs are made for fixed income. And the Goldman Sachs Access High Yield Corporate Bond ETF (NYSEARCA:GHYB) could be a great ETF in the sector.GHYB sets itself apart from junk-bond ETF rivals like the popular SPDR Bloomberg Barclays High Yield Bond ETF (NYSEARCA:JNK) by using various screens to eliminate firms with shaky or deteriorating financials. High-yield bonds already come with a hefty amount risk. They don't call them junk bonds for anything. But, if you can kick-out those firms that are experiencing lower revenues or sinking cash flows, you have a better chance of making money and not losing it. * 5 Stocks Under $5 to Buy Before They Soar For income seekers, this allows for a bit of safety as well as high yield. GHYB currently has a 30-day yield of 6.16%. This yield and stability can be had for a low active mutual fund beating 0.34% in expenses. Invesco S&P 500 Quality ETF (SPHQ)Pop the hood on most active mutual funds and there's a good chance that managers look for stocks with rising revenues, strong dividends, the potential for growth, etc. The hallmarks of so-called quality stocks. And that makes these active mutual funds prime candidates for smart-beta ETFs.One of the oldest quality stocks funds in the sector is the Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ).Launched in 2005, SPHQ tracks the S&P 500 Quality Index. This index digs through the bread and butter index and looks for stocks that score high on three measures: return on equity, accruals ratio and financial leverage ratio. Basically, stocks that getting the job done and are doing so with increasing cash flows and low debts. SPHQ then selects the top 100 stocks in the index to include in the fund. Currently, tech dominates at 40% of assets, with healthcare stocks at a distant second place at just 11% of AUM.Performance for the ETF has been mixed over the years. But that's mostly because SPHQ used to track two different indexes: the Value Line Timeliness Select Index and the S&P 500 High-Quality Rankings Index. The switch to its current index was a smart move as the S&P 500 Quality Index has long been a top performer vs. the regular S&P 500.With expenses of just 0.15%, SPHQ is a great addition to a portfolio and replacement for many active large-cap mutual funds. Fidelity Dividend ETF for Rising Rates (FDRR)One of the earliest styles of smart-beta ETFs to hit the market has been dividend-focused funds. The Fidelity Dividend ETF for Rising Rates (NYSEARCA:FDRR) is the latest incarnation of those ETFs.Dividend stocks and ETFs loose some appeal in the rising rate environments like today. Investors flee these higher yielding instruments for safer bonds as the Fed raises. However, historically, dividend growers have increased their payouts at faster rates than measures of inflation and interest rate hikes. These sorts of stocks continue to do well as the Fed increases benchmark rates.And that's what FDRR does.The ETF tracks a proprietary smart-beta index that follows a basket of large- and mid-cap dividend growth stocks that have a positive correlation of returns to increasing 10-year U.S. Treasury yields. In a nutshell, FDRR combs through all the dividend-paying stocks out there and finds the ones that actually see increased buying activity thanks to their dividend growth as the Fed raises rates. You're basically getting high income and the ability to see that income grow over time. * 5 Stocks That The Smart Money Likes Given the Fed's pace of rate hikes, FDRR could be a wonderful smart-beta ETF to replace an expensive equity income fund in your portfolio.At the time of writing, Aaron Levitt owned a long position in LRGF. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Smart Money Stocks to Buy Now * The 10 Best Cheap Stocks to Buy Right Now * 7 Restaurant Stocks to Watch in 2019 Compare Brokers The post 5 Smart-Beta ETFs to Replace Your Actively Managed Funds appeared first on InvestorPlace.
After years of sitting back and enjoying the ramp up in growth, investors are now getting a taste of the increased volatility that usually occurs towards the end of a bullish cycle. As many reevaluate their investment portfolios, one may consider quality exchange traded fund strategies to help smooth out the ride ahead. Looking at the slope of the yield curve, Bank of America Merrill Lynch argued that volatility could double in 2019 and believed that many investors, notably the millennials demographic, are unequipped to handle the sudden change up, CNBC reports.
There are five primary investment factors for stocks: growth, low volatility, momentum, profitability/quality, small size and value. Of those five, quality is arguably the most overlooked and almost certainly the one with the most fluidity when it comes to defining its traits. While there are varying definitions of what makes a stock a "quality stock," there are some hallmarks investors can look for in an effort to identify quality securities. Those include strong return on equity (ROE) ratios, good corporate-credit ratings, low leverage ratios, capacity for and/or histories of buybacks and dividends and earnings variability. Due to the variable definitions of quality and different applications of the factors, exchange-traded funds (ETFs) that emphasize quality stocks usually utilize varying methodologies. The Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ) is one of the best ETFs that focuses on quality stocks, but SPHQ ETF has not always been dedicated to quality. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 A-Rated Stocks the Smart Money Is Piling Into SPHQ ETF, which turned 13 years old last month, follows the S&P 500 Quality Index, a collection of the 100 S&P 500 stocks "that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio," according to Invesco. ### The History of SPHQ ETF SPHQ has not tracked the S&P 500 Quality Index for the entirety of its 13-plus years of existence. "It recently cut its fee and, in June 2016, switched to a more transparent index, which targets firms with strong cash flows and balance sheets," said Morningstar in a recent note. "It should hold up better than most of its peers during market downturns and offer attractive performance over the long-term." As for fees, SPHQ ETF currently charges 0.15% per year, or $15 on a $10,000 investment. While a slew of growth and value ETFs feature lower fees than SPHQ, the quality ETF's expenses stack up favorably with its direct competitors as well as the broader universe of large-cap, smart-beta funds. Over the past 36 months, SPHQ ETF trailed the S&P 500 by 540 basis points while being slightly less volatile than the benchmark U.S. equity gauge. During that same period, SPHQ outpaced the Russell 1000 Value Index by 350 basis points. Measuring SPHQ's performance against other single-factor strategies is instructive for multiple reasons. First, investors considering a single-factor ETF should and do measure that factor's merits against other factors. Second, academic research and historical data confirm that stocks can simultaneously fit into several categories. For example, in theory, it's possible for a value stock to also be a low-volatility stock. Likewise, a growth stock can also be a quality stock. SPHQ only holds large- and mid-cap stocks. Among its large-cap holdings, more than 53% are classified as either growth or value stocks. ### Inside SPHQ Some single-factor ETFs are primarily weighted to just one or two sectors. For example, it is common for value funds to be primarily weighted towards energy and financial services stocks. Meanwhile, growth funds frequently have significant exposure to the consumer discretionary and technology sectors. Since traits such as ROE and strong balance sheets are part of the quality factor, ETFs that focus on quality can have some sector-concentration risk. In the U.S., tech companies have some of the strongest balance sheets, best ROE ratios and some of the most prodigious generators of free cash, so it may not be surprising that over 39% of SPHQ is made up of that sector. Conversely, sectors that are known to be home to highly leveraged companies make up very little of SPHQ ETF. The quality ETF has no exposure to utilities stocks while the real estate and materials sectors combine for just 2.21% of the fund's roster. "The types of quality stocks that the fund targets are unlikely to offer eye-popping returns, and they could lag the market for extended periods, particularly during strong market rallies," said Morningstar. "So, they are probably not attractive to aggressive investors, which could cause them to become undervalued. These stocks should reward patient investors with a better risk/reward profile than the broader market over the long term." Todd Shriber does not own any of the aforementioned securities. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Key Emerging-Market Stocks to Buy for Contrarian Investors * 7 Stocks at Risk of the Global Smartphone Slowdown * 7 Pharmaceutical Stocks That Just Raised Prices This Year Compare Brokers The post The Invesco S&P 500 Quality ETF Is Devoted to Top-Notch Stocks appeared first on InvestorPlace.
The quality factor often goes overlooked compared to growth and value, but with market volatility still a primary consideration and many investors favoring defensive sectors, quality stocks and the related exchange traded funds are worth examining in 2019. The Invesco S&P 500 Quality ETF (SPHQ) , which tracks the S&P 500 Quality Index, is one of the ETFs with a direct emphasis on the quality factor. SPHQ's underlying index includes the S&P 500 members “that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio,” according to Invesco.
Exchange traded funds that focus on quality companies are garnering more attention as investors look to take cover in these stormy conditions. “We’ve seen a lot more returns to quality stocks, to value ...
In what is proving to be a turbulent fourth quarter for U.S. stocks, more advisors and investors are considering factor-based strategies and exchange traded funds. The Invesco S&P 500 Quality ETF (SPHQ) , which tracks the S&P 500 Quality Index, is one of the ETFs with a direct emphasis on the quality factor. While the quality factor often trades at a premium to value, quality stocks are usually less volatile than traditional broad market strategies, indicating some overlap with the low volatility factor.
Amid elevated equity market volatility, some investors are tapping factor-based strategies, including the quality factor. Valuing high quality value is particularly important as bull markets enter their waning stages, as some market observers believe the current bull market is doing. In the early stages of bull markets, lower quality companies see their shares soar.
Despite the recent hiccup in the equity market, U.S. stocks may continue to strengthen along with the expanding economy. Investors, though, may turn to quality companies and related exchange traded funds ...