Retail investors who like to dabble in the stock market without actively managing their portfolios often turn to exchange traded funds that are managed by professionals who know their way around trading even amid tumultuous economic conditions. SGX market strategist Geoff Howie said in an interview with The Business Times on May 31 that over the last two or three years, exchange traded funds have had higher assets under management and the number of retail investors who are active in the ETF market has almost tripled over a 3-year period.
Ben Slavin of BNY Mellon told CNBC’s ETF Edge on May 17 that although product development in ETFs slowed down from 50 ETFs a month in 2021 to 35 in 2022, there is still a strong market interest in the space. He noted that new ETFs are largely leaning towards an actively managed approach as market strategies need to be dynamic to tackle volatility.
While the stock market seems to be almost constantly on edge ever since the pandemic began in early 2020, most investors still want to take their chances and buy the dips on notable stocks that are heavily beaten down. However, a diversified and more affordable approach to get exposure to big players like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN) is via exchange traded funds.
Best ETFs to Invest In For Long Term
10. Vanguard Dividend Appreciation Index Fund (NYSE:VIG)
The largest holding of the ETF is Microsoft Corporation (NASDAQ:MSFT), one of the Big Five US technology firms. Stifel analyst Brad Reback on June 2 reiterated a Buy rating on Microsoft Corporation (NASDAQ:MSFT) but lowered the price target on the shares to $320 from $350 based on the multiple contraction across the group and citing the company’s updated guidance to account for a more unfavorable foreign exchange environment through May. However, he cited secular tailwinds, strong execution, and a growing total addressable market for his optimistic outlook on the stock. Microsoft is also a notable dividend payer in the tech space, and its upcoming quarterly dividend per share of $0.62 is payable on June 9, to shareholders of record as of May 19.
According to Insider Monkey’s Q1 data, 259 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 262 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company, with 27.8 million shares worth about $8.6 billion.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
9. Vanguard Total Stock Market Index Fund (NYSE:VTI)
Vanguard Total Stock Market Index Fund (NYSE:VTI) seeks to track the performance of the CRSP US Total Market Index, exposing investors to large, mid, and small-cap equities across growth and value styles. The fund remains fully invested, with an expense ratio of 0.03%. Vanguard Total Stock Market Index Fund (NYSE:VTI) holds 4,112 stocks in its portfolio, with a top 10 holdings concentration of 24.20% and total net assets equaling $1.2 trillion. The primary sectors that the fund invests in are technology, industrials, healthcare, financials, and consumer discretionary.
Tesla, Inc. (NASDAQ:TSLA) is one of the biggest holdings in Vanguard Total Stock Market Index Fund (NYSE:VTI)’s portfolio. On April 20, Tesla, Inc. (NASDAQ:TSLA) reported earnings for the first quarter of 2022. The company posted earnings per share of $3.22, above consensus estimates by $0.95. The revenue of $18.76 billion rose 80.54% year-over-year, outperforming market forecasts by $917.76 million.
Among the hedge funds tracked by Insider Monkey, 80 funds were bullish on Tesla, Inc. (NASDAQ:TSLA), with Cathie Wood’s ARK Investment Management holding a prominent stake in the company, comprising 1.5 million shares worth $1.7 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), Tesla, Inc. (NASDAQ:TSLA) is a popular stock among elite investors.
Here is what Baron Fifth Avenue Growth Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“During the first quarter, we bought back shares in Tesla, Inc., which designs, manufactures, and sells electric vehicles, solar products, energy storage solutions, and batteries. We believe that despite the run in the stock over the last few years, Tesla presents a favorable risk/reward profile and remains a Big Idea with only about 1% market share of the automotive market. Since we bought the stock during the first quarter, shares increased 27.1%, despite a complex supply-chain environment, on continued revenue growth and record profitability. Robust demand and operational optimization allow the company to offset inflationary pressures while vertical integration provides flexibility around supply bottlenecks. Moreover, we expect new localized manufacturing capacity to drive additional efficiencies while software initiatives, including the autonomous driving program, are accelerating, offering valuable optionality to the stock.”
8. Schwab U.S. Small-Cap ETF (NYSE:SCHA)
Schwab U.S. Small-Cap ETF (NYSE:SCHA) aims to track the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index. The fund may offer long-term growth for a portfolio, in addition to providing potential tax-efficiency. Schwab U.S. Small-Cap ETF (NYSE:SCHA) holds 1,807 stocks, with an expense ratio of 0.04% and total net assets of approximately $14.5 billion.
A prominent holding in Schwab U.S. Small-Cap ETF (NYSE:SCHA)’s portfolio is Ovintiv Inc. (NYSE:OVV), a Colorado-based distributor of natural gas, oil, and natural gas liquids. Mizuho analyst Vincent Lovaglio on May 31 reiterated a Buy recommendation on Ovintiv Inc. (NYSE:OVV) but lowered the price target on the stock to $77 from $78. As per the analyst, global energy undersupply has driven energy commodity prices higher, in addition to supply chain constraints and broader macro uncertainty. This theme has benefited the US exploration and production companies, said the analyst, who expects the growth to continue. He lifted price targets by 3% on average and leaned towards gas over oil-weighted E&Ps.
Among the hedge funds tracked by Insider Monkey, 44 funds were bullish on Ovintiv Inc. (NYSE:OVV) at the end of Q1 2022, with collective stakes worth over $2 billion. Paul Marshall and Ian Wace’s Marshall Wace LLP is the…
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