This is the time of the year I get asked all the time. Where should I put my money for nice and steady growth over the next year? It’s like a new year’s resolution for everyone and then they don’t stick to it. It’s just one of those things. So here are my 3 top picks for ETFs. SPY, QQQ, ARKK
Topic one: SPY
If you’re looking for just one stock to buy, it’s tough to beat SPY(it’s now a CFD traded like the underlying asset), or the SPDR S&P 500 Trust (SPY). Just one trade instantly exposes you to the entire market and S&P 500. Want to own Microsoft stock (MSFT) and Apple stock (AAPL) also Alphabet (GOOGL)? All the top tech stocks are in there and what about top consumer brands like Disney (DIS), Walmart (WMT), and now Tesla (TSLA)? Yes, those are in the SPY, too. If you buy SPY you instantly own all the hottest stocks in the Standard & Poor’s 500. Just like that.
What is SPY?
SPY is an exchange-traded fund that owns all the stocks in the Standard & Poor’s 500 index. The S&P 500 is arguably the most important market measure used by investors and traders around the world — as it’s the benchmark for trillions in dollars of investment.
The S&P 500, created in 1926, tracks the rise and fall of the largest 500 stocks trading on U.S. exchanges and the S&P 500 is widely seen as the definitive measure of the U.S. stock market among most investors due to its superiority to rival. On average the SPY returns 10% a year (data over the last 40 years) and in 2020-21 it grew 16%. Did you beat the SPY this year?
Topic two: QQQ
QQQ stock, or the Invesco QQQ Trust (QQQ), puts the 100 most-important Nasdaq stocks into your portfolio in one trade. Best of all, it leaves out financials, focusing your portfolio on companies in faster-growing sectors. The QQQ a low-cost way to own the companies building the future economy and rather than trying to pick the right tech stock to buy and when to buy it, place one trade and you own them all right now.
What Is QQQ?
QQQ stock is the fifth most-popular exchange-traded fund in the world, holding more than $140 billion in investors’ assets. It tracks the Nasdaq-100 index, which owns the most valuable non-financial stocks on the Nasdaq. QQQ is also the largest ETF that tracks a narrower slice of the stock market. The largest ETF is the broad SPY, which owns all the stocks in the S&P 500.
But while the QQQ isn’t a broad market ETF, it owns the most valuable stocks trading on the Nasdaq. That definition means the QQQ is very tech-heavy. Most of the world’s biggest technology stocks still trade on the Nasdaq and given that technology continues to be the top-performing sector, giants like Microsoft (MSFT), Apple (AAPL), and Amazon.com (AMZN) only get more important in the ETF. QQQ returned 15.2% annually over the past 15 years, which includes dividends and in 2020-21 it grew 54%. You may have beaten the SPY but did you beat the QQQ?
Topic three: ARKK
Over the past year, the firm has seen the assets under its seven exchange-traded funds explode by more than tenfold, from $3.2 billion at the end of 2020 to a whopping $34.5 billion as of December. The growth is partially due to ARK funds’ strong performance in 2020, but also to surging interest from investors, who are pouring billions of dollars of new cash into ARK products. Only six years since it was founded, ARK is now a top-10 fund issuer in the U.S.
What Is ARKK?
The investment seeks long-term growth of capital. The fund is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to the fund’s investment theme of disruptive innovation. Its investments in foreign equity securities will be in both developed and emerging markets. It may invest in foreign securities (including investments in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)) and securities listed on local foreign exchanges. The fund is non-diversified. Over the past 6 years, it has a yearly growth of 46%, and in 2020-21 it grew 152%. You may have beaten the SPY or may have outperformed the QQQ but if you beat the ARKK ETF you have had one hell of a good year.
I’m not someone who pushes ETF but my question is how much money have you sitting in an ISA or a savings account. Spare capital that hasn’t done anything in years. With an ETF this is a sit and hold for 1, 5 or even 10 years type of trading. This is food for thought. Happy trading. This is the kind of stuff I talk about on my webinars twice a week, Sundays and Wednesdays.