All posts by Todd Shriber

7 Best ETFs for Investors Wondering How to Start a Retirement Fund

Source: Shutterstock

Figuring out how to start a retirement fund can be a daunting task for any investor, but that is especially true for younger, novice investors that are nowhere near retirement age.

Investors wondering how to start a retirement fund do not need to scramble for ideas and vehicles to immediately start retirement planning. Easy-to-access instruments include 401k plans (for some workers) and individual retirement accounts (IRAs).

“You may want to think about opening an IRA in addition to or instead of a 401k plan if your employer doesn’t offer one. Even if you have a 401k, you may have more investment choices through an IRA,” according to Bank of America Merrill Lynch. “Whether you choose a Traditional or Roth IRA will depend largely on your income and age. (If you’re a small business owner, you may also be able to contribute to a small business IRA).”

For novice investors pondering how to start a retirement account, exchange-traded funds and mutual funds are excellent places to start for a number of reasons, including the ability to bolster portfolio diversification and access multiple asset classes.

With that in mind, here are a few ideas for investors wondering how to start a retirement fund.

ETFs for Starting a Retirement Fund

Vanguard Total Stock Market ETF (VTI)

Vanguard Total Stock Market ETF (VTI)

Expense Ratio: 0.04% per year, or $4 annually per $10,000 investment

Home to $101.8 billion in assets under management at the end of July, the Vanguard Total Stock Market ETF (NYSEARCA:VTI) is the third-largest U.S.-listed ETF by assets. Across its various share classes, the Vanguard Total Market Fund is one of the largest index funds in the world with nearly $726 billion in combined assets under management.

Not only that, but VTI is cheap. Really cheap. Its annual fee of just 0.04%, which makes it less expensive than 96% of competing funds, according to Vanguard data. Focusing on fees is an important factor for investors wondering how to start a retirement fund because when investing for the long-term, the more an investor saves on fees, the more his or her capital grows.

Another element investors pondering how to start a retirement account need to consider with equity investments is broad-based exposure. VTI delivers on that with a roster of more than 3,650 stocks, or more than seven times the number of components found in the S&P 500.

ETFs for Starting a Retirement Fund

iShares Core S&P U.S. Growth ETF (IUSG)

iShares Core S&P U.S. Growth ETF (IUSG)

Expense Ratio: 0.04%

Younger investors pondering how to start a retirement account should remember that they have the benefit of time, meaning some of their investments should be aggressive in nature. Growth stocks fit the bill as aggressive plays.

The iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG) offers cost-effective exposure to a broad basket of domestic large- and mid-cap growth stocks. This $5.11 billion ETF, which turned 18 years old in July, tracks the S&P 900 Growth Index and holds 543 stocks.

Something else investors wondering how to start a retirement account should remember about growth strategies is that this investment factor typically leans toward the technology and consumer discretionary sectors. IUSG allocates nearly 57.50% of its combined weight to those sectors compared to just under 39% in the S&P 500.

ETFs for Starting a Retirement Fund

Invesco QQQ (QQQ)

Source: Shutterstock

Invesco QQQ (QQQ)

Expense Ratio: 0.20%

Keeping with the theme of younger investors being aggressive in the earlier stages of establishing retirement accounts, the Invesco QQQ (NASDAQ:QQQ) is a fund worthy of consideration.

QQQ, which tracks the Nasdaq-100 Index, is home to 103 stocks, nearly 61% of which are classified as growth stocks. And if the exposure to technology and consumer discretionary stocks in a typical growth fund is not enough, QQQ devotes over 82% of its roster to those two sectors.

QQQ is also an appropriate vehicle for investors looking for exposure to each of the FAANG stocks. Those five stocks combine for approximately 40% of the ETF’s weight.

ETFs for Starting a Retirement Fund

WisdomTree U.S. LargeCap Dividend Fund (DLN)

Source: Shutterstock

WisdomTree U.S. LargeCap Dividend Fund (DLN)

Expense Ratio: 0.28%

A frequently asked question when wondering how to start a retirement fund is how to generate income. Dividend-paying stocks are a key component of that equation and the WisdomTree U.S. LargeCap Dividend Fund (NYSEARCA:DLN) is one of the better dividend ETFs to consider.

DLN is not a yield-focused strategy, nor does it take into account for how many years a company has boosted its payout. Rather, the fund’s underlying index, “is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share,” according to WisdomTree.

DLN’s expense ratio is higher than some of the legacy funds in this category, but DLN also warrants that fee because, over long holding periods, it has handily outperformed some of its cheaper rivals. The fund, which yields almost 2.50% on a trailing 12-month basis, allocates about 45% of its combined weight to the technology, financial services and healthcare sectors.

ETFs for Starting a Retirement Fund

Vanguard Intermediate-Term Corporate Bond ETF (VCIT)

Source: Shutterstock

Vanguard Intermediate-Term Corporate Bond ETF (VCIT)

Expense Ratio: 0.07%

Investors wondering how to start a retirement account should remember that diverse, effective retirement planning also includes some fixed income exposure. The Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) can help with that.

Historically, investment-grade corporate bonds are not significantly more volatile than U.S. government debt, but corproates do offer a better income profile, making this an ideal, lower risk asset class for retirement-minded investors. VCIT holds over 1,700 bonds, but over a third of its portfolio comes via financial services issuers.

“The strategy’s five-year annualized return through June 2018 of 3.5% matched the category average. The portfolio’s low fee helped it produce the competitive return against its peers that dabble in higher-yielding junk bonds,” according to Morningstar.

ETFs for Starting a Retirement Fund

Invesco S&P SmallCap 600 Pure Value ETF (RZV)

Source: Shutterstock

Invesco S&P SmallCap 600 Pure Value ETF (RZV)

Expense Ratio: 0.35%

Historical data confirm that one of the most potent factor combinations is size and value. Novice investors pondering how to start a retirement fund should include small-cap and value stocks in that fund. The Invesco S&P SmallCap 600 Pure Value ETF (NYSEARCA:RZV) conveniently does that and has been one of the best-performing small-cap funds during the current bull market in U.S. stocks.

RZV tracks the S&P SmallCap 600 Pure Value Index and holds 165 stocks with an average market capitalization of just over $1 billion. Over longer holding periods, RZV has been less volatile than broader small-cap benchmarks, such as the Russell 2000 Index.

Although it is a value fund, RZV allocates over 35% of its weight to the consumer discretionary sector, a group often associated as a growth destination. Industrial and financial services names combine for over 28% of RZV’s weight.

Over the past three years, which were a trying time for value stocks, broadly speaking, RZV has outpaced the large-cap S&P 500 Value Index, by 320 basis points.

ETFs for Starting a Retirement Fund

How to Start a Retirement Fund: ProShares Investment Grade—Interest Rate Hedged (IGHG)

ProShares Investment Grade–Interest Rate Hedged (IGHG)

Expense Ratio: 0.30%

If you’re wondering how to build a retirement account in a rising interest rate environment, a newer breed of bond funds offer protection against Federal Reserve tightening cycles. The ProShares Investment Grade—Interest Rate Hedged (BATS:IGHG) was one of the first ETFs to offer income and rising rates protection under one umbrella.

IGHG has a minuscule net effective duration of 0.04 years and arrives at the reduced sensitivity to rising rates by “including a built-in hedge against rising rates that uses short positions in U.S. Treasury futures,” according to ProShares.

Traditionally, short-term bond funds mean less income as the trade-off for reduced rate risk, but that is not the case with IGHG. The ProShares fund offers a solid 30-day SEC yield of 4.04%, which is exceptional among rate-hedged and investment-grade bond funds.

As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.

10 Stocks Hedge Funds Are Buying

Source: Shutterstock

It is widely believed that everyday investors can glean valuable insight from Wall Street titans. While following big-name investors into various stocks is not a guarantee of a winning investment, investors love following icons, such as Warren Buffett.

Perhaps due to the notions that hedge funds are “sexy” and hard to access for many regular investors, many investors also like to follow the buys and sells of various hedge funds. The rub with this strategy is that hedge fund managers, no matter how long they have been around or how much money they run, are not infallible. In fact, data suggest many hedge funds have not beaten the S&P 500 in recent years.

Of course, there are hedge fund managers who perform well and charge their clients a pretty penny for the privilege. Here are some of hedge funds’ favorite stocks at the moment, a group that includes predictable fare as well as some more obscure names.

Apple Inc. (NASDAQ:AAPL) is the largest U.S. company by market value, so perhaps it is not surprising that the iPhone maker is usually a hedge fund favorite. While not a hedge fund, Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK-A) is a major Apple shareholder. In fact, Apple is Berkshire’s top holding, even exceeding the likes of The Coca-Cola Co (NYSE:KO) and Wells Fargo & Co (NYSE:WFC).

The company, shares of which are up nearly 21% over the past year, recently launched a red iPhone 8 and the iPhone 8 Plus. While Apple is a story stock, there are some near-term issues to consider.

Recently Goldman Sachs said of iPhone sales it “ expects sales of 53 million units in the calendar first quarter. For the three months to June, Goldman said it expects sales of 40.3 million units, a reduction of 3.2 million from its previous forecast,” according to CNBC.

Stocks Hedge Funds Are Buying: Amazon (AMZN)

This one probably is not a surprise, either. Not when Amazon.com, Inc. (NASDAQ:AMZN) is one of just four U.S. companies with a market capitalization north of $700 billion. Recent data indicate that Amazon, the largest consumer discretionary company in the U.S., is a top 10 holding at 80 hedge funds, more than any other stock.

Although shares of Amazon are up 60.5% over the past year, analysts are exceedingly bullish on the stock. The average analyst price target on the stock is around $1,670, implying significant upside potential from recent closes around $1,440.At least two analysts have $2,000 price targets on Amazon.

Amazon is mostly known as a retailer, but much of the long-term allure comes from its cloud computing business, Amazon Web Services (AWS). That could be a $60 billion unit in just a few years.

Stocks Hedge Funds Are Buying: Alphabet (GOOGL)

Stocks Hedge Funds Are Buying: Alphabet Inc. (GOOGL)

Source: Shutterstock

Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), the parent company of Google, is another hedge fund favorite. In fact, more than 50 hedge funds feature Alphabet among their top 10 holdings. Like Apple and Amazon, Alphabet is one of the U.S. companies with a market value north of $700 billion.

The three stocks highlighted here thus far cement at least one notion: Hedge funds love tech. Data confirm as much.

“Net exposures remain higher than the beginning of the year at 51 percent. The technology sector is still 37 percent of that total. Data shows that there has been some aggregate selling of technology stocks since the middle of March, but the magnitude has been relatively in line with other sectors,” Bloomberg reported, citing Morgan Stanley research.

Stocks Hedge Funds Are Buying: Bank Of America (BAC)

Stocks Hedge Funds Are Buying: Bank Of America (BAC)

Source: Shutterstock

Among financial services stocks, Bank of America Corp. (NYSE:BAC) is one of the hedge fund faves. This could be a combination of hedge funds betting on banks in a rising-interest-rate environment, betting the Donald Trump Administration’s more favorable regulatory stance on the financial services sector will be a tailwind for the group or that financials are a credible play.

Shares of Bank of America are up more than 30% over the past year, putting the stock ahead of the Financial Select Sector SPDR (NYSEARCA:XLF) by more than 1,300 basis points.

The stock resides in the low $30’s at this writing, but some market observers believe it could jump to the low $40’s over the next 12 to 24 months.

Stocks Hedge Funds Are Buying: United States Steel (X)

United States Steel Corporation (NYSE:X) is not necessarily widely held by hundreds and hundreds of hedge funds, but what is notable about the largest U.S. steelmaker is that it is a favorite of some the best-performing stock-picking hedge funds.

Ordinary investors may want to be cautious with shares of U.S. Steel. The stock rallied earlier this year after the Trump Administration unveiled tariffs aimed at protecting domestic aluminum and steel producers. However, the White House subsequently announced diluted versions of those tariffs, including exemptions for several countries that are among the largest importers of steel to the U.S.

This stock is down nearly 18% over the past month.

Stocks Hedge Funds Are Buying: Caesars Entertainment (CZR)

Stocks Hedge Funds Are Buying: Caesars Entertainment (CZR)

Source: Shutterstock

Caesars Entertainment Corporation (NASDAQ:CZR), the owner of Caesars Palace among other casinos, is another widely held hedge fund stock. Thanks to a tax benefit, Caesars posted fourth-quarter earnings of $2.48 per share, well above the 8 cents Wall Street expected.

Caesars is out of bankruptcy, something the company appears to be celebrating with some nice compensation for its executives.

The stock surged almost 50% last year, but could be succumbing to profit-taking this year as it is down more than 13% year-to-date.

Stocks Hedge Funds Are Buying: SPDR Gold Shares (GLD)

Let’s change things up a bit and added an exchange-traded fund (ETF) to the list of hedge fund favorites. The SPDR Gold Shares(NYSEARCA:GLD) is the world’s largest gold-backed ETF and also a favorite ETF in the hedge fund community. Among non-equity ETFs, GLD is one of the most widely held by professional investors.

Historically, gold prices are challenged by rising interest rates because bullion does not pay a dividend. However, the dollar has not been responsive to the Federal Reserve’s recent rate hikes, which is good news for dollar-denominated commodities like gold.

Investors are responding as GLD has taken in over $1 billion in new assets this year. Near-term catalysts include a possible upside break of $1,400 and the belief by many in the gold industry that supply will be declining because most of the world’s easy-to-access gold has already been mined.

Stocks Hedge Funds Are Buying: NXP Semiconductors (NXPI)

Stocks Hedge Funds Are Buying: NXP Semiconductors (NXPI)

Source: Shutterstock

The status of NXP Semiconductors NV (NASDAQ:NXPI) as a hedge fund fave is probably attributable to Qualcomm Corp.’s (NASDAQ:QCOM) desire to acquire the remainder of NXP it does not already own. Qualcomm has recently extended the deadline on that offer multiple times.

NXP makes mixed signal and standard product solutions for radio frequency (RF), analog, power management, interface, security, and digital processing products.

Qualcomm’s interest in NXP could be its way of fending off Broacom’s (NASDAQ:AVGO) acquisition overtures.

Stocks Hedge Funds Are Buying: Allergan (AGN)

With hedge funds so enamored by tech stocks, that does not leave a lot of room for significant exposure to other sectors. Just three healthcare stocks are considered widely held by hedge funds and Allergan Plc (NYSE:AGN) is one of them.

Allergan has been a healthcare laggard over the past year, shedding more than 30% over that period while the S&P 500 Health Care Index is up 10.24%. Hedge funds could be wagering that Allergan, which makes specialty pharmaceuticals, could shed non-performing units to boost shareholder value or perhaps become a takeover target itself.

Still, Allergan has a market value of $58 billion, making the likelihood of it being acquired somewhat small. The company could regain investors’ faith by doing some smart shopping of its own at a time when rivals are expected to do the same.

Stocks Hedge Funds Are Buying:  Microsoft (MSFT)

Stocks Hedge Funds Are Buying:  Microsoft (MSFT)

Source: Shutterstock

Along with Alphabet, Amazon and Apple, Microsoft Corporation (NASDAQ:MSFT) is a member of the $700 billion club and another hedge fund fave. The stock is up more than 41% over the past year, which is an exciting growth trajectory for a company of Microsoft’s size and age. Speaking of growth, Microsoft has become a venerable tech dividend growth name and yields an admirable (compared to the broader tech space) 1.8%.

Microsoft joins Alphabet and Amazon on Morgan Stanley’s list of 15 prime beneficiaries of the big data era.

“We expect the best performing stocks in the technology sector could broaden from consumer- to enterprise-oriented technology providers, challenging the consensus view and positioning that exists in the market today,” according to Morgan Stanley.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investor Place