ETF Investing Made Even Easier with These 7 Picks


ETF investing

is so popular because of its ease and safety – but you might feel
like the amount of choices in exchange-traded funds can be
overwhelming.

But there’s nothing to be overwhelmed about with ETFs. ETFs are
like mutual funds that trade like stocks. Unlike mutual funds that
are priced once per day after the markets close, ETFs can be traded
on the major exchanges intra-day – or anytime during the trading
day. The prices fluctuate just like stocks.

ETFs are also popular because of their low turnover, meaning
they’re not often replaced as fiscal assets during a set time
period. And they’re great when an investor is looking to diversify
her portfolio. Plus, there are multiple ETFs to choose from on
every major index.

Because there are so many ETFs on the market, selecting a
specialization can seem difficult. But we’ve done the research for
you.

7 Picks for Successful ETF Investing

ETF Investing Pick No. 1: First Trust IPOX-100 Index Fund
(NYSE:
FPX

)


Money Morning

‘s Defense and Tech Specialist Michael Robinson knows that
investment bankers absolutely love to boast about successful
initial public offerings (IPOs). He’s also well aware that most IPO
shares are divided into mutual funds, hedge funds, high-net-worth
investors, and insurance companies, which makes it particularly
difficult for the average investor to get a leg up in the IPO
market.

Enter FPX.

This IPO ETF can be used to sidestep Wall Street completely. It
offers a good combination of tech stocks, as well as a decent entry
into the broader market. “That makes it a great ‘twofer’ in which
40% of the top 20 holdings relate to tech or the life sciences,”
says Robinson. This ETF consists of 100 diverse stocks, with access
to various sectors, including financial, metals, heavy industry,
energy, auto, and retail. Now trading at just under $54, FPX is
priced cheaper than many of its portfolio holdings, including
Facebook Inc. (Nasdaq:
FB

) and Alibaba Group Holding Ltd (NYSE:
BABA

), which is what makes it the most cost-effective way for the
average investors to cash in on the IPO boom.


Money Morning Members: Continue reading for six more ETF
investing picks…

ETF Investing Pick No. 2:

Renaissance IPO ETF (NYSE ARCA:
IPO

)

This ETF was launched in October 2013 in response to investors’
demand for a safer, cheaper method to participate in IPOs. It was
designed by an IPO research team to give investors exposure to the
latest IPOs on the market. One-third of the fund’s holdings consist
of tech stocks. The other industries included are healthcare, real
estate, and energy. According to etfrends.com, on Monday, March 4,
37 members of the Bloomberg IPO Index reported year-to-date losses
of 10% or more. Renaissance ETF, however, was up nearly 6%. And
since this time last year, IPO’s earnings gained 8%.

ETF Investing Pick No. 3: First Trust North American
Energy Infrastructure Fund

(NYSE Arca:
EMLP

)

EMLP focuses on master limited partnerships (MLPs). MLPs are
limited partnerships required to obtain 90% of their cash flow from
real estate, commodities, or natural resources.

Energy MLPs are midstream companies. They transport, store, and
process oil and gas rather than own it. So they stay profitable as
long as there is a commodity to move. This is what makes them
market-proof. The EMLP ETF holds 68 diverse stocks from the oil and
energy sector. This past January, it became the first ETF to accrue
over $1 billion in assets.

Ultimately, this ETF gives investors the opportunity to profit
from an otherwise difficult situation – they will benefit from
changes brought on by low
oil
prices

. EMLP is up 11% over the past year.

ETF Investing Pick No. 4:

First Trust NYSE Arca Biotechnology Index Fund

(NYSE Arca:
FBT

)

This popular biotech ETF has risen a staggering 34% in the past
year, and 14% so far in 2015. FBT is a broad exchange-traded fund
of 31 companies. Its holdings include smaller companies like the
red-hot Novavax Inc. (Nasdaq:
NVAX

), up 32% on the year, but it also tracks biotech as a whole. And
that particular industry is already experiencing a stellar
2015.

Along with having NVAX on its roster, FBT holds Lannett Co. Inc.
(NYSE:
LCI

), a generic drug vendor up 60.7%., as well as Biogen – which
experienced an 8% surge in value in the course of one day: Friday,
March 20. As

Money Morning

Associate Editor Jim Bach told readers recently, “FBT is not just a
collection of smaller firms getting a boost from various regulatory
catalysts. Its firms of all shapes and sizes are appealing to the
investing public for what the sector brings to the market.”

ETF Investing Pick No. 5:

Vanguard REIT ETF

(NYSE Arca:
VNQ

)

Real estate investment trusts (REITs) are controlling the
dividend market. In order to play this trend, an investor’s best
bet would be to snatch up shares of VNQ’s ETF. While interest rates
remain low, REITs continue to outperform.

And there’s more to the REIT industry than dividends.

“The industry’s total market cap was $907.4 billion in 2014,”

Money Morning

Associate Editor Alex McGuire wrote last week. “That marks a
staggering 235% increase since 2009. At this rate, it is well on
its way to becoming a $1 trillion industry within the next few
years.” VNQ is currently up 19% in the past year, with an
impressive yield of $3.38.

ETF Investing Pick No. 6: PowerShares SP SmallCap
Health Care ETF

(Nasdaq:
PSCH

)

PSCH offers exposure to high-profit small cap stocks without the
risk of picking just one tech startup. Because, right now,
small-cap stocks are beating the broader market by a large
margin.

The Russell 2000 Index, which consists mainly of smaller
companies, has surged 20% in the last five months. During that same
span of time, the Dow has gained merely 9.5% and the SP 10.5%.
Unfortunately, many investors have missed out on these gains
because of the belief that small-cap stocks are far too volatile.
But the beauty of this ETF is that it’s tapped into the strongest,
most solid sectors.


Money Morning

‘s Small-Cap Investing Specialist Sid Riggs says, “It’s important
to make sure you’re investing with global must-have trends that
provide strong tail wind. My favorite sectors right now are
biotech, cybersecurity, all-flash memory storage, artificial
intelligence, and Chinese consumers – all of which either meet a
critical demand for the future or are the future.”

PSCH has 71 stock holdings, all of which are U.S. companies.
Over 95% of the fund’s holdings are invested in either small-cap or
micro-cap firms. Its share price is up 13% from the beginning of
the year. Conversely, the Dow is up just 1.5%.

ETF Investing Pick No. 7: Fidelity Nasdaq Composite Index
Tracking Stock

(Nasdaq:
ONEQ

)

This ETF mirrors the holdings on the tech-focused Nasdaq
Composite Index. It’s a prime way to get stakes in the big-cap tech
stocks like Apple Inc. (Nasdaq:
AAPL)

, Microsoft Corp. (Nasdaq:
MSFT

), Intel Corp. (Nasdaq:
INTC

), and Amazon.com Inc. (Nasdaq:
AMZN

).


Money Morning

‘s Executive Editor Bill Patalon says, “Though ONEQ – by definition
– is focused on technology, the fund also provides some nice
diversification. The ETF holds about 1,940 stocks, 46% of which are
tech related. Consumer cyclicals, financial services, and
industrials make up another 25% of ONEQ’s holdings.”

Since March 25, 2014, ONEQ has surged 14% in share price – 4%
since the beginning of 2015. Currently, its share price is
$192.68.

The Bottom Line:

If you want to invest in a particular sector but aren’t sure which
stocks to choose, ETF investing is a great way to go. Their expense
ratios are much lower than that of mutual funds and they offer more
trading flexibility.

Everybody Stay Calm:

Recently, the Nasdaq eclipsed the 5,000 level for the
first time in 15 years. The pundits are convinced this is a
bubble. But we firmly believe the gloom-and-doomers are wrong. In
fact, we think the tech sector will beat the broader market by a
long shot.

Here’s wh
at the numbers are actually saying and how you’ll profit
from them…

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