New To Investing? 2 ETFs For Novice Investors
Investing.com | Jun 16, 2021 04:22
U.S. benchmark indices, like the Dow Jones Industrial Average, the S&P 500 and the NASDAQ 100 have seen significant returns over the past 12 months. They are up 37%, 41% and 45%, respectively. The early days of the pandemic brought high volatility in share prices and tested the patience of long-term investors.
Yet, unprecedented fiscal and monetary stimulus, as well as improving consumer and investor sentiment, meant many shares made spectacular comebacks. Data from U.S. brokerages show that over the past year, retail investors across different age groups have been putting capital into stocks.
Market history reminds us investing in robust stocks with decades of growth ahead can help create multi-bagger portfolios. Therefore, today we discuss two exchange-traded funds (ETFs) that new investors could consider researching as possible long-term portfolio additions.
h2 1. Invesco NASDAQ Next Gen 100 ETF/h2Current Price: $33.08
52 Week Range: $24.67 - $35.18
Dividend Yield: 0.33%
Expense Ratio: 0.15% per year
The Invesco NASDAQ Next Gen 100 ETF (NASDAQ:QQQJ) invests in the 101st to the 200th largest non-financial firms on the NASDAQ Composite stock exchange.
Most investors would be well familiar with the NASDAQ 100 index that is made up of the 100 largest businesses listed on the NASDAQ, except for businesses from the financial industry.
Instead, QQQJ focuses on firms that could possibly move up to the NASDAQ 100. It started trading in October 2020.
Information technology companies have the highest weighting (42.6%) in this fund, followed by health care (19.51%), consumer discretionaries (14.26%), communication services (13.90%) and others.
The top 10 businesses comprise about 20% of net assets of $1.2 billion, which means short-term choppiness in a single stock would not affect the value of the fund. At present, the first five names in the fund are:
- Crowdstrike (NASDAQ:CRWD): a cybersecurity group headquartered in Sunnyvale, California; up 9% year-to-date (YTD);
- Roku (NASDAQ:ROKU): a streaming entertainment platform based in San Jose, California; up 4% YTD;
- Fortinet (NASDAQ:FTNT): a cybersecurity company based in Sunnyvale, California; up 54% YTD;
- Old Dominion Freight Line (NASDAQ:ODFL): a less-than-truckload (LTL) shipping group based in Thomasville, North Carolina; up 28% YTD;
- Zscaler (NASDAQ:ZS): a cloud security platform headquartered in San Jose, California; up 4% YTD.
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So far in 2021, the fund has returned more than 8%, and saw an all-time high in mid-February. Similarly, the Invesco QQQ Trust (NASDAQ:QQQ), which tracks the returns of the NASDAQ 100 index, is also up about 9%. It saw an all-time high in recent days.
We believe QQQJ should be on investors’ radar in 2021. A number of tech names in the fund have come under pressure in recent weeks. Therefore, investors could consider buying the dips in the fund. The fund's holdings are likely to create shareholder value for many years into the future.
h2 2. SPDR® Portfolio S&P 500 High Dividend ETF/h2Current Price: $42.13
52-Week Range: $26.15 - $42.64
Dividend Yield: 4.45%
Expense Ratio: 0.07% per year
The SPDR® Portfolio S&P 500 High Dividend ETF (NYSE:SPYD) provides access to shares with a high level of dividend income that could also see capital appreciation. It began trading in October 2015, and net assets stand at $4.8 billion. The current low-interest-rate environment has meant investors are looking for funds with stable dividends. As a result, funds like SPYD have seen increased capital inflows.
SPYD, which has 77 holdings, tracks the returns of the S&P 500 High Dividend Index. The top 10 stocks comprise less than 15% of the fund, and no name has a weighting of more than 1.75%.
In terms of sectoral breakdown, financials (23.46%) have the top spot. Next in line are real estate stocks (19.58%), followed by energy (13.66%), utilities (12.93%) and IT (6.69%).
Data storage groups Seagate Technology (NASDAQ:STX) and Iron Mountain (NYSE:IRM), real estate investment trusts (REITs) Regency Centers (NASDAQ:REG) and Simon Property Group (NYSE:SPG), and ConocoPhillips (NYSE:COP) top the names in the ETF.
So far this year, the fund has returned more than 28%, hitting a record high in early June. Trailing P/E and P/B ratios of 15.10% and 1.88%, as well as the current dividend yield, suggest the fund could see new highs in the months ahead.
Most passive income seekers do not tend to sell dividend shares in a panic, even when markets come under pressure. Therefore, even if there were to be short-term profit-taking in the names that make up SPYD, they are likely to recover fast.
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