Tag Archives: stock market

Investing in a Volatile Environment

Guest Article By Wendy Peterson

The volatility that we recently experienced in the market is very troubling to some investors. Unfortunately, those investors who hit the panic button and sold off are recognizing large losses in their portfolios only to turn to investments that are perceived as safer places to invest.

The fact of the matter is that we invest our money to earn long-term rates of return that will exceed the rate of inflation and help us preserve our purchasing power. Historically, cash has been the worst place to invest over the long term.

Losing Investment Capital in a Volatile Market
According to Fidelity Investments, investors who sold their 401(k) holdings while the market was crashing between October 2017 and March 2018, and then stayed on the sidelines, have only seen their account values increase by about 2%, including contributions, through June of 2019. This compares with those who held on and saw account balances bounce back by around 50%. During periods of extreme volatility, wealth managers will often tell clients to stay invested rather than sell and lock in large losses in a seesaw market.

Building confidence in your strategy is a way to keep from making the mistake of buying high and selling low. Having the mental conviction to tell yourself that you have a carefully planned portfolio of high quality investments goes a long way toward getting through the toughest days of market volatility. If you are unsure of how to select high quality investments, consult with an financial manager or registered investment advisor.

The question is; how do you reach that state of mind? It’s not easy if you are the type of person that tends to get knots in your stomach when the market drops. We outline some steps below that might be able to increase your level of confidence.

Conquering the Fear of Volatility
One step you should take to better handle volatility is to make sure you have adequate cash reserves for a financial emergency that might arise. This way you are not depending on your portfolio for unforeseen expenses and your anxiety level will be lower, knowing that you don’t need to sell your investments when they have declined in value.

Make sure you have a mix of investments that fits in to your risk tolerance and time frame. This can be accomplished by considering how you have felt when past market declines have occurred. Your wealth management advisor should be able to provide you with a thought provoking questionnaire that will give you a score when completed. The score on the questionnaire will have a corresponding asset allocation that you can use to determine the split you will have between stocks, bonds and cash.

Once your allocation has been determined, stick with it. It is a good practice to reallocate your assets on a regular basis to keep your risk level the same. This means that a portion of those investments with better performance will be sold (sell high) to purchase in order to purchase shares in those that have not performed as well (buy low).

Other ways to hedge volatility can be through the use of options. Two simple strategies can be applied. One is the sale of covered call options against underlying stock or ETF positions. In this strategy you (the seller of the option) collect money from a speculator (the buyer of the option) in exchange for an agreement to sell your stock only if it reaches a specified price (higher than where it trades at the time of the transaction). The option must hit the price target (strike price) within a predetermined time frame (expiration date). If it does not, the contract expires you keep the money paid and are free to sell more options against that stock position.

The other strategy is to simply buy a put option. This gives you the right to sell your position in a stock or ETF that you own at a predetermined price within a predetermined time frame. For this privilege you will pay money (a premium) to the potential buyer (seller of the put option) of your stock. This strategy should be implemented in periods of low volatility, as the cost of the transaction will rise as markets begin to fall.

Buy With Conviction
Let’s say you’ve owned a stock that has done well over time. The stock has had a history of increasing revenue, profits and dividend increases. It seems like the stock is usually going up when the market goes up, only now there has been a big selloff in the market, and the stock has dropped dramatically due to market conditions. It may be time to do some homework on the company and make sure that the drop is due to just a generally bad market. If it that turns out to be the case, maybe it is time to buy more of the stock. Great companies often go on sale in market declines, only to have dramatic upturns once the market decline is over.

Speak With Your Wealth Management Team
You should also consult with your financial manager when markets are volatile. Investment professionals are in the business of understanding what is causing the market volatility and can often provide some insight. Often times your investment professional can help ease your anxiety and remind you of your commitment to your allocation and financial goals.

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Setting Your Money Goals

Guest Article By Robert Alan Stewart 

3 Factors which determine your investment strategy

You may be wondering what is the right investment strategy for you, but without knowing anything about you, any advice on which investments are right for you may in fact be the wrong ones. There are basically three factors that determine which are the right investments for you, they are:

1. Your age

2. Purpose for the money

3. Your risk profile

Starting with your age. It would be rather silly of you to invest all your money in growth funds if you are aged 65 because if the market takes a dive such as was the case during the 1987 sharemarket crash and to a lesser extent, the Global Financial Crisis during the early 2000s you have less time to recover from these setbacks whereas the young ones have time on their side.

The purpose for the money is the second factor.

Decide whether you require the money in the short-term, medium-term, or long-term.

Short-term would be up to a year.

Medium-term is 1-5 years

Long-term is longer than five years

Short term expenses would be, a bank account for emergencies, a holiday within a year, dental expenses, or t pay for the kids schooling for a year.

Medium-term would be savings for a car.

Long term would be your retirement fund, saving for a house deposit, or saving for the trip of a lifetime.

Your risk profile is a determining factor in where you invest your money. If the thought of the sharemarket taking a dive will give you sleepless nights then investing growth stocks in the sharemarket is not for you. A better option would be managed funds where you will be given a choice between growth, balanced, and conservative funds.

It is important not to get into debt for there is a cost to debt and that is interest. Interest adds to the cost of goods bought with borrowed money, and this adds up to a fortune during a lifetime of borrowing for consumables. This is called bad debt because the value of the item declines over time.

There is such a thing as good debt though and this is your first home because the value of the property increases during the lifetime of the loan but even this is not always a good option for some people if you live a kind of transient lifestyle.

“Everyone is to their own,” so only you know what makes you tick so your personal circumstances are the determining factors which govern where best to invest your savings.

You must do your homework before you invest in anything, whether that is the sharemarket, managed funds, or gold. There is so much information available on just about everything, and that includes finance. It is just a matter of learning the ropes and having a financial strategy which suits your personal circumstances.

Most people are able to save money but having goals and selecting the right investments for your savings can help increase your assets and enable you to reach your goals quicker. In life one size does not fit all as far as deciding where to invest your money. My site has several finance related articles, visit: http://www.robertastewart.com

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Best Online Investment Account Info: Tips for Getting Started With an Online Broker and Trading

Guest Article By George Botwin

If you want to really get involved in stock investments, then it’s a good idea to hire a broker to help you create an account. Most people handle everything online these days. There are online brokers you can go through who often charge less than the traditional broker since they don’t have a physical office to maintain. Most people do all of their buying and selling online as well. How can you make sure that you choose the best online investment account?

Commissions are always a top priority for internet investors. You shouldn’t have any problems finding a brokerage firm that only charges a few dollars on a commission. What you really look for are the fees. Even if the commission is advertised as being very low, you could end up paying tons of money on fees. Transparency is essential in an online broker account. Some companies even may even try and charge you inactivity fees and maintenance fees.

You’ll always need versatility. Only choose a brokerage firm that offers a broad range of investment types, and not just stocks. Take the time to investigate your options with a particular broker. In addition to stocks, there should be different types of futures, bonds, EFTs, etc.

How to Start With the Best Online Investment Account

To start the best online investment account possible, you’ll need useful resources and tools to educate you and optimize your trading efficiency. More advanced users can take advantage of market scanners, EFT scanners, detailed macro-economic event calendars, bond scanners, and other tools and metrics that they can use on any public company in the world.

If you need help with your portfolio, look for tools that will assist you with portfolio management offered by online brokers. These types of tools can come with features such as automatic notifications for when it is time to rebalance your portfolio and “what-if” analysis for each trade you are considering.

Go mobile, if possible. That way, you’ll have 24/7 access to your portfolio, accounts, and all of the tools you use at your disposal, no matter where you are. The best brokerage companies will offer a workstation that is available via app and web. Ideally, the app should have a lot of positive reviews, be updated frequently, provide time-delayed intra-day quotes, the option to add certain stocks to your “watchlist”, and more.

How can you create the best online investment account possible? As you start to educate yourself more and get the hang of the basics, you might want to turn towards Zacks Trade. This platform is a very affordable alternative than outright hiring a traditional broker. It comes with plenty of useful tools, apps, resources, and a fully-featured workstation.

To get closer to financial freedom, visit George’s website: https://www.financiallygenius.com/zacks-trade/

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The Need for Discipline in the Stock Market

Guest Article By Dr. Winton M. Felt

Good trading rules are important. However, even those who concoct great rules tend not to follow them. Most people lack the consistency necessary to stick to those rules even when things are going badly.

Make the decision. Will you be consistent in following your rules or not? Most people who invest or trade never make the decision. It is almost impossible to be a consistent winner in the stock market without the consistent application of good decision rules. Think about how the market reacts to news events. A new jobs report is released by the government that shows more people are jobless. Immediately, the market plunges. The debt of a foreign country is downgraded and panic hits the market. Stocks plunge in many sectors. What is going on here? Just as an EKG can tell a cardiologist some things about a person’s heart function, so we can consider the market to be connected to the nervous system of millions of investors.

There is a stimulus and a response. Depending on the nature of the stimulus, the response is reasonably predictable. The market reflects emotional states of the population. In order to profit in the stock market, it is necessary to avoid thinking like the rest of the population. When the population pushes the market down in a fit of panic selling, the negative attitude about owning stocks is at a peak. However, that is precisely the time when people should be most positive about owning stocks. The individual investor tends to feel the same way the population as a whole feels. To follow a set of rules with consistency, therefore, is difficult. It often forces a person to act contrary to his emotions.

Assume, for example, that you have just bought a stock with a fantastic story. Blixis Company (BLIX) has just discovered a permanent cure for the common cold and has patent rights to the serum. The stock is at $10 a share and you note that it has been closely following a rising trendline. You buy it for $10 when it is right on the trendline. You believe this stock is likely to go to at least $100 and that it will probably split several times before it stops climbing. After a week, the stock is at $15 and it is still moving along the trendline. One day you happen to be looking at the chart of this stock and you notice that it has fallen below the trendline. It is selling at $15 but the trendline is at 15.46. What do you do? Do you say to yourself that this is only a temporary bout of profit taking and decide to continue holding? Two days later the trendline is at $17 and the stock is still at $15. Do you tell yourself that “stocks fluctuate and you must give them room to do so” or do you sell? At $15, the stock is 11.76% below the trendline.

Most investors in this situation would keep holding. However, if you are still holding, then you must face the fact that you probably do not have a strategy at all. You have bought a “story stock” and you are psychologically locked into it because you believe in its story. A strategy consisting of a set of decision rules enables a person to draw a line in the sand and say “this is where I pull the plug.” The probability of a person coming out ahead in the scenario described above, without his adhering to the dictates of a good set of decision rules, is not great. What if the FDA insists on additional data before clearing the drug? The stock would then plummet. It could take a year or more to acquire sufficient data to satisfy the FDA. What if while you are waiting another company comes up with a cure that is based on a slightly different process that will enable the company to manufacture its drug more cheaply than Blixis Company can manufacture its drug? If that were to happen, BLIX would probably plunge and you would still be holding the stock.

A consistent rule-following strategic investor times his purchase so he can buy when risk of further decline is minimal. He never becomes married to a stock. Finally, he always has an exit strategy, because unexpected bad things happen. In fact, these are the broad principles followed by stockdisciplines trader/investors. Beyond these general concepts, an investor/trader should have specific well-defined rules for buying and selling. For every buyer, there is a seller. One is more likely to make money on a transaction, and the other is more likely to lose money on the same transaction. Without strictly adhering to a sound strategy, guess which one you are most likely to be.

Copyright 2018, by Stock Disciplines, LLC. a.k.a. StockDisciplines.com

Dr. Felt has market reviews, stock alerts, and free tutorials at https://www.stockdisciplines.com Information and tools for computing stop losses are also at https://www.stockdisciplines.com

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Smart Ways to Invest: A Quick Overview of Some of the Smartest Things You Can Do With Money

Guest Article By George Botwin

Do you suddenly find yourself with a bit of money and want to know about some smart ways to invest? How can you best put that money to good use? The most important thing to do – if you haven’t already done so – is to pay off your debts. Get that out of the way. If you still have debts when you invest, any interest you might earn from the investment will just equal out the interest you’ll have to pay on the debts. Holding onto debt might even be more costly than any profit you might make from investments.

Once you’re all clear with debts, then you can consider making smart investments. Investment bonds are usually considered a good idea for those who are afraid of taking on too much risk. The potential for returns is quite lower than those of stocks, but you will still get some interest over time, whether you invest in US government bonds or foreign bonds. Just do the right research first to find out which foreign bonds are likely to be the most profitable over the next decade.

Learn about the different types of mutual funds and decide if they are smart ways to invest for you. They are categorized by asset class: cash, bonds, and stocks, and then further categorized by objective, strategy, or style, such as stock mutual funds, money market mutual funds, and so forth. The downside to mutual funds is lack of ownership. The investor actually doesn’t own the individual stock, and therefore lacks perks such as voting rights.

Smart Ways to Invest With Diversification

While you don’t have to put all of your money in a single bank account, it’s still considered wise by many people to open up a Certificate of Deposit account with a reputable online bank that offers a high APY – even higher than a regular savings account. The drawback? You have to agree to let your money stay in the bank for a certain period of time and won’t be allowed to withdraw any of it prior to that time without getting penalized.

Dividend-paying stocks can be among the smart ways to invest for intermediate and advanced investors. Dividends are a portion of a company’s profit that are paid out to shareholders (usually quarterly). If you own a dividend stock, you can earn cash in the short term as well as the investment itself through market appreciate during the long-term.

As for the smart ways to invest in individual stocks and a few other opportunities, it’s best to join a group of insiders where you will get picks from the true professionals and experts. Having access to high-quality investment analysis, such as that offered by Capitalist Exploits, is a great way to gain an edge in investing.

To get closer to financial freedom, visit George’s website: https://www.financiallygenius.com/capitalist-exploits/

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Using the Best Stock Indicators for Your Trades and Investments

Guest Article By Joanne Cooper

Market volatility and insecure trades and investments are a continuing highlight. As many traders and investors learned this year, when bullish markets and record highs are trending, it may lead to an instant pullback. If you don’t want to get caught by surprise with the downtrends, then it is important to use the best stock indicators. This will help you to reduce your risk while allowing your portfolio to benefit from analytical additions.

The market will always move up and then down, causing many to lose money or to gain profitability. The difference in the trades and investments is not how the market is moving; it is how one approaches their portfolio. A winning game, based on the ability to strategically position your moves in the market, easily helps you to build the proper reputation for trades and investments. The best stock indicators can assist you with the positioning you need.

Analytical tools are the first forms of indicators that you need. These look at the patterns and trends in the market. They identify the data, including price, volume and time that it takes for a market to turn. It also looks at the quantitative information over a certain time. You will be able to define the data and how it is moving as well as how each day relates to the next, forming patterns that predict when a change will happen. You want to look at how each is functioning independently in the market. It is also important to define how each correlates with others, specifically to identify how other stocks are impacting your trades and investments.

The best stock indicators also offer predictive data. These are offered so you can strategically move in the market. The predictions include an analysis of the data as well as the expectations of how the market will move. While most focus on real – time statistics, newer technologies define the probability of turn in the market before it happens. These offer a different approach to the stocks you are investing in, allowing you to find strategic positions, no matter which way the market is turning.

Protecting your profitability is important for every trader and investor. Using the best stock indicators helps you to identify moves in the market and to find a strategic position based on the analytics that you use. By adding together different trends, patterns and data, you will easily be able to find the best way to move in the market.

Using the best stock indicators reduces market volatility. BluSignals provides forward thinking tools that are able to predict changes in the market before they happen. Determining trends and buy / sell signals guides trades and investments to strategic positioning.

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Harnessing Stock Market Volatility

Guest Article By Steve Selengut

If you were to Google “stock market volatility”, you would find a wide range of observations, conversations, reports, analyses, recipes, critiques, predictions, alarms, and causal confusion. Books have been written; indices and measuring tools have been created; rationales and conclusions have been proffered. Yet, the volatility remains.

Statisticians, economists, regulators, politicians, and Wall Street gurus have addressed the volatility issue in one manner or another. In fact, each day’s gyrations are explained, reported upon, recorded for later expert analysis, and head scratched about.

The only question I continue to have about all this comical hubbub is why don’t y’all just relax and enjoy it? If you own only high quality income generating securities, diversify properly, and adopt a disciplined profit-taking routine, you can make stock market volatility your very best friend (VBF).

Decades ago, a nameless statistics professor brought me out of a semi-comatose state with an observation about statisticians, politicians, and economists. “In the real world”, he said, “there are liars, damn liars, and any member of the groups just mentioned”. An economist or a politician, armed with a battery of statistics, is an ominous force indeed.

Well, now, all economists and statisticians have high powered computers and the ability to analyze volatility with the same degree of certainty (or is it arrogance) that they have developed with regard to individual-stock risk analysis, economic and geographical sector correlation dynamics, and future prediction in general.

  • But the volatility (and the uncertainty it either causes or results from, depending upon the expert you listen to) persists.

Modern computers are so powerful, in fact, that economists and statisticians can now calculate the investment prospects of just about anything. So rich in statistics are these masters of probabilities, alphas, betas, correlation coefficients, and standard deviations, that the financial world itself has become, mundane, boring, and easy to deal with. Yeah, sure it has.

Since they can predict the future with such a high degree of probability, and hedge against any uncertainty with yet another high degree of probability, why then is the financial world in such a chronic state of upheaval? And why-o-why does the volatility, and the uncertainty, continue?

I expect that you are expecting an opinion (yet another opinion) on why the volatility is as pronounced as it seems to be compared with years past. Frankly, Scarlett, I can’t really make myself give a damn. The uncertainty that we are asked to believe is caused by volatility just simply is not. Uncertainty is the regulation playing field of the investment game… and of life, actually.

The more you invest in higher risk securities, the more you speculate on future directional change, the more you ignore growing income, and focus only on market value, the more uncertain your investment environment becomes. So risk, speculation, poor diversification, low income generation, and up only market value expectations combine to exacerbate uncertainty, but nothing can eliminate it… only that is certain.

Volatility, on the other hand is simply a force of nature, one that needs to be embraced and dealt with constructively if one is to succeed as an investor.

But this machine driven, hyper-volatility that we have been experiencing recently, has been magnified by the darkest forces of the “dismal science” and the changes that it has encouraged in the way financial professionals view the makeup of the modern investment portfolio.

On the bright side, enhanced market volatility actually enhances the power of the equity and income security trading disciplines and strategies within the Market Cycle Investment Management ( MCIM ) methodology… an approach to market reality that embraces market turbulence, and harnesses market volatility for results that leave most professionals either speechless or in denial.

  • MCIM focuses on the highest quality equity securities and well diversified income security portfolios, creating a lower than normal risk environment where price fluctuations can be dealt with productively, without panic. Higher prices generate profit taking transactions; lower prices invite additional investment. The underlying quality, diversification, and income generation create a more tolerable “uncertainty quotient” than other methodologies.

But, with no statistical data necessary (or available) to support the following opinion, consider this simplistic rationale for the hyper-volatility of today’s stock market.

Volatility is a function of supply and demand for the common stock of a finite number of dirty, evil, greedy, polluting, congress corrupting, job creating, product and service providing, innovation and wealth developing, foundation supporting, gift giving, tax-collecting corporations.

Those of us who trade common stocks in general, Investment Grade Value Stocks in particular, owe a debt of gratitude to the real volatility creators: the hundreds of thousands of derivative products that bring an entirely speculative kind of indirect supply and demand to the securities markets.

Generally speaking, the fundamental, emotional, political, economic, global, environmental, and psychological forces that impact stock market prices have not changed significantly, if at all.

Short term market movements are just as unpredictable as they have ever been. They continue to cause the uncertainty you need to deal with, by using proven risk minimization techniques like asset allocation, diversification, and profit taking.

The key change agents, the new kids on the block, are the derivative betting mechanisms (Index ETFs, for example) and their impact on the finite number of shares available for trading. Every day on the stock exchange, thousands of equities are traded, a billion shares change hands. The average share is “held” for mere minutes. No one seems to we seek out analysts who spin tales of “fundamental” brilliance, profitability, or income production.

On top of derivative trading in real things such as sectors, countries, companies, commodities, and industries, we have a myriad of index betting devices, short-long parlor games, option strategies, etc. What’s a simple common share of Exxon to do? I’ve heard financial talk show hosts warn listeners to never, not ever, buy an individual equity!

  • Is today’s movement in any individual equity the result of demand for the company shares themselves, or demand for the multiple funds, indices, and other derivatives that track or include the company in their “model”? How many derivative owners have a clue what’s inside their ETF?

We are in an environment where investors feel smarter dealing in sectors than in companies; where 401k “retirement” plans (they really are not retirement plans, you know) are banned by regulators from offering even reasonably high yielding investment opportunities, and where government fiscal policies have forced millions of actual retirement savings accounts to seek refuge in the shark infested waters around Wall Street.

Market volatility is here to stay, at least until multi-level and multi-directional derivatives are relocated to the Las Vegas casinos where they belong, until regulators realize that 7% after higher expenses is better than 2% after minimal expenses, and until interest rates are allowed to return to somewhat normal levels… and this is what feels to some like an elevated level of uncertainty.

For the discernible future, we’ll need to find a way, a methodology, that makes both of them our VBFs.

My articles always describe aspects of an investment process I have been using since the 1970’s, as described in my book, “The Brainwashing of the American Investor”. All the disciplines, concepts, and processes described therein work together to produce (in my experience) a safer, more income productive, investment experience. No implementation should be undertaken without a complete understanding of all aspects of the process.

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Compounding Is The Best And Least Time Consuming Strategy

Guest Article By Gregory Neil Smyth

Time in a Compounding strategy is your biggest friend. The longer your investment is allowed to Compound, the bigger your Account becomes.

If you have a ‘super’ busy life, and have a lump sum to invest, after making the initial investment there is nothing more to do. Get on with your life and watch your dividend reinvestment strategy build up.

Compounding involves adding to your original capital invested every year, and then that new balance to be added to in the next year, and so on. Buy solid dividend paying companies, like the Dividend Aristocrats, and you are assured of the best Compounding strategy available.

Not only do Dividend Aristocrats pay dividends every year, their dividend history through all sorts of market upheavals, their dividends also Rise every year. This means a Growing dividend Yield for the Compounding strategy, and when coupled with dividend reinvestment, you have 2 strategies in one!

Most pay Rising dividends 4 times a year, so no matter the current state of the market, reinvestment is taken care of by these companies for you. No temptation to sell in a big drop, just let the reinvestment strategy take care of itself, and LET IT COMPOUND.

Your Time is your own, after the original investment is made, just ‘put it in the bottom drawer’ and watch it Compound for as long as you like.

In the last big ‘drop’ in the market (2008-2009), 10 Dividend Aristocrat stocks were delisted from the Dividend Aristocrat Index because of changes to their dividend policy(they cut their dividend), so make sure to only invest in the ‘biggest and best’. The longer they have paid rising dividends and stayed in the Index the better.

Companies like McDonald’s, Johnson & Johnson, 3M, Wal Mart, who have paid rising dividends for decades, through all sorts of economic shock/upheavals, are the ones to invest in.

If you are investing through a savings plan, you are probably adding to your investment once a year, so again your Time is yours.

Even if you have 10-20 years to go till retirement, don’t ‘put off’ this strategy, as Compounding is the best ‘hands off’ strategy there is. Even if only your bills in retirement are taken care of, that is a huge bonus, the alternative is not pretty.

The best holding period for this strategy is ‘forever’, but when you eventually need the money, there is no need to sell, just change the reinvestment part to cash dividends, and everything ‘is sweet’. No capital gains tax, as no shares have been sold, you are receiving a ‘GROWING’ income stream for ever!

Time is your FRIEND in a Compounding investment strategy, so start NOW.

For a website dedicated to creating wealth by compounding, and creating long term wealth, go to [http://www.wealthbycompounding.com] This article has been written by Gregory Neil Smyth, who has just released an eBook ‘How To Create Wealth By Compounding’ and is available for purchase at the above website.

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Searching For A Healthcare ETF

As I reviewed my investment portfolio I noticed that I am still missing an ETF for the healthcare sector. Personally, I’ve been leaning toward the Vanguard Health Care Index Fund ETF ($VHT). But I was interested to see what else was being offered so I did a bit more research.
I searched out for healthcare ETFs with these different Fund Families:

  • Fidelity
  • Invesco
  • iShares
  • Vanguard

The search resulted in about 11 different funds for review. I narrowed it down to 9 funds because Invesco S&P SmallCap Health Care ETF ($PSCH) and Invesco DWA Healthcare Momentum ETF ($PTH) does pay out dividends. Dividends are a key focus of mine so these 2 funds are automatically out. So now I look at the other funds and review the factors that I use for selecting ETFs that I’m interested in investing in. I look at dividend payout, dividend yield, and stock price. Based on those criteria, I eliminated the following funds:

$FHLC – this was the only healthcare fund being offered by Fidelity. Even though the price is very economical at $56/share, the dividend is too low to be worth the investment ($0.70/share) even though the dividend yield is around 1.23%. To be honest most of the fund in this list are paying out pretty close to this yield amount. Even if the stock price dropped close to its 52 week low range of $35, the yield would still be under 2%.

Then there’s $IEIH, an iShares fund that is trading at around $32/share. But it’s also paying out a low dividend of $0.40 for a yield of 1.22%. Even if the share price dropped to its 52 week low of $22.07/share the yield would still be under 2%.

Now we come to $IHF. This fund is trading at the high end of its 52 week range at about $228/share. Even if the price dropped to its 52 week low of $134.50, the current yield of 0.73% would not get that much better. It would only increase to 1.24%. Way below my criteria of 3% minimum.

That leaves us with the Invesco funds of $PBE, $PJP, and $RYH. I’m not going to detail these individually because they are all low dividend yield funds that pay out pennies per share. Their yields range from 0.04% to 0.82%. They’re all trading at the high end of their 52 week range so the yields will not be getting any better.

So, out of the 9 funds that were left, I eliminated 6 of them based on my criteria. Now I need to decide between:

$IHE – iShares U.S. Pharmaceutical ETF

$IYH – iShares U.S. Healthcare ETF

$VHT – Vanguard Health Care ETF

$IHE is the least expensive of the 3 funds. It’s trading at the high end of its 52 week range at about $176/share with a dividend payout of about $2.14 (for a yield of 1.22%). At its low end range it would still only have a yield of 1.86%. The expense ratio for this fund is 0.42%. Morningstar rates this fund as average risk with below average returns.

Next we have $IYH that is also trading at its 52 week high range of $242/share while its dividend payout is $2.86 for a yield of 1.19%. The yield would be similar to $IHE if the shares traded at the low end of the 52 week range. Expense ratio of 0.43% with a Morningstar rating of a below average risk and average return.

Lastly, we have $VHT. This fund is also trading at its high end of its 52 week range at about $220/share. The dividend payout is $2.55 (for a yield of 1.16%). Again, if the price dropped to the low end of the 52 week range the yield would be 1.86%, also, like the others. However, the key difference is the expense ratio, While the other funds have their expense ratio north of 0.40%, this fund has an expense ratio of only 0.10%. And the Morningstar rating is below average risk and average return. Similar to $IYH.

I have outlined how I go about reviewing and deciding which ETF to invest in. This may not work for you because you may have a different set of criteria or you may be looking at a different set of data. That’s fine because you are the one that has to decide the best way to invest in your money. I’m not a financial professional and nothing in this post is to be taken as investment advice. If you are unsure of what you need to do or how, seek the advice of a professional.

Even though I tend to lean toward Vanguard ETFs, I did a search of other fund families in order to make sure that I wasn’t locked into my bias toward them. I will probably purchase $VHT when the funds are available and thus will have a position in the healthcare sector. $VHT because of its lower expense ratio. If I had to select a second choice it would probably be $IHE because, even though the expense ratio is 0.40+, it is very slightly lower than the other iShare funds.

But do you own due diligence and make sure that you are the one that is formulating and controlling your investment strategy.