There are 32 ETFs recommended below, some already in the portfolio and some new. The way to read them is that the recommended ETF is at the bottom of each box with its major holdings listed above. These lists of major holdings, which typically account for 30-50pc of the total value of the fund, give a major indication of where the fund is targeted, what is driving performance and how much overlap there is between funds.
There may seem to be too many to choose from but it may not matter too much which you choose. The vast majority of funds in the portfolio are showing a profit so you could probably pick the ones you buy with a pin. A good strategy is to invest some money every month or quarter. This could be in a fund you already hold or a new one. I like all the funds mentioned below, which is why I am recommending them. This doesn’t mean I don’t like others in the portfolio. On the contrary, most of the names are doing well.
The worst performer by far is the FTSE 250 fund with two times leverage, although even there my most recent recommendation is in profit. In last month’s issue of Chart Breakout I wrote about the strange death of the UK stock market, which has become one of the worst performing stock markets in the world and has not had what I would call a sustained bull market for over two decades.
Personally, I have very few UK shares in my portfolio and the ETFs I favour are overwhelmingly US and technology focused. This explains why since 2017, when I launched QV for ETFs, the average gain on all my recommendations, assuming no sales whatsoever, is 22pc, while, over the same period the FTSE 100 is down around 14pc.
1. ARKF @ $34 ARK Fintech Innovation – actively managed fund which invests in a blended range of large-cap equities with an emphasis on fintech and technology.
2. ARKK @ $78.50 ARK Innovation – actively managed fund which targets companies poised to benefit from disruptive innovation in one of three areas: industrial innovation, genomics or Web x.
3. ARKW @ $92.50 ARK Next Generation Internet – an actively managed fund with a broad mandate to invest in companies its managers have identified as benefiting from an infrastructure shift away from hardware and software toward cloud and mobile.
4. CHIS @ $27.30 Global X China Consumer Staples – tracks a cap-weighted index of Chinese large- and mid-cap companies in the consumer staples sector.
5. CWEB @ $27.30 Direxion Shares China Internet 2x leverage – provides 2x leveraged daily exposure to an index composed of overseas-listed Chinese internet companies.
6. EBIZ @ $24.88 Global X E-Commerce – tracks a market-cap-weighted index of global e-commerce companies, including online retailers, retail platforms, and supporting businesses.
7. FNGS @ $79 Microsectors FANG+ – an ETN that provides exposure to an index of “FANG” companies (Facebook, Apple, Amazon, Netflix, and Google [Alphabet Inc.]), as well as other companies that exhibit similar characteristics. Presumably, the index will always include these five companies; an index committee is responsible for selecting the additional names.
8. FNGO @ $100 Microsectors FANG+ 2x leveraged – as above but with two times daily leverage.
9. FNGU @ $121.50 Microsectors FANG+ 3x Leveraged – as above but three times leveraged. The MicroSectors FANG+ Index 3X Leveraged exchange-traded note aims to triple the daily return of an index of so-called FANG stocks, meaning Facebook, Amazon, Apple, Netflix, and Google-parent Alphabet Inc. The fund offers highly concentrated exposure to those five “core” companies, plus another five technology growth stocks, including Alibaba, Baidu, NVIDIA, Tesla and Twitter. [ed: presumably FNGS and FNGO will have the same portfolios; note that the two leveraged indices are intended for short term traders rather than long term investors. I think they can work for long term investment as long as you accept the incredible volatility).
10. FPXI @ $53.46 First Trust Traded Fund 2 International Equity Opportunities – tracks a market-cap-weighted index of the 50 largest developed markets ex-US IPOs over the first 1,000 trading days for each stock.
11. GAMR @ $60.25 Wedbush Video Game Technology – tracks an equity index of global firms that support, create or use video games. Stocks are assigned to pure play, non-pure play or conglomerate baskets, and weighted equally within each.
12. IBB @ $1405 iShares Nasdaq Biotechnology – tracks the performance of a market-cap-weighted index of biotechnology and pharmaceutical companies listed on the NASDAQ.
13. IBUY @ $75.48 Amplify Online Retail – tracks an index of global stocks issued by firms with revenues dominated by online retail sales. Stocks are equally weighted within 2 geographic buckets.
14. IGM @ $288 iShares Expanded Tech – offers broad, comprehensive coverage of the North American technology sector, but caps each security’s weight at 8.5pc to provide diversified exposure to a concentrated industry.
15. IGY @ $294 iShares Expanded Tech Software – provides diverse exposure to the North American software industry as well as any ETF can. It caps individual security weights at 8.5pc to provide more diverse exposure to a concentrated industry.
16. IWMO @ $49.8 iShares World Momentum – Global exposure with a focus on stocks that have been experiencing an upward price trend.
17. MILN @ $28.5 Global X Millennials – tracks an index composed of US-listed companies that derive a significant source of their revenue from spending categories determined to be associated with millennials—people born between 1980 and 2000.
18. MTE @ 1285p Montanaro European Smaller Companies Trust – the investment objective of the company is to outperform its benchmark, the Morgan Stanley Europe small companies Index.
19. MTUM @ $137.6 iShares USA Momentum – tracks an index of large- and mid cap US equities, selected and weighted based on price appreciation over 6- and 12-month periods and low volatility over the past 3 years.
20. OGIG @ $40.8 O’Shares Global Internet Giants – tracks an index of global internet and internet technology stocks, selected and weighted by growth and quality factors.
21. PCT @ 2120p Polar Capital Technology Trust – researching and identifying developing technology trends and investing in the companies best placed to exploit them
22. PNQI @ $190 Invesco Nasdaq Internet – tracks a modified-market-cap-weighted index of Internet companies listed in the U.S.
23. PSJ @ $119 Invesco Dynamic Software – uses a quantitative model to choose US software companies across the market cap spectrum.
24. PTF @ $103.5 Invesco Technology Momentum – tracks an index of U.S. tech firms selected and weighted by price momentum.
25. PTH @ $128 Invesco Healthcare Momentum – tracks an index of U.S. healthcare firms selected and weighted by price momentum.
26. QQQ @ $257 Invesco QQQ Trust – tracks a modified-market-cap-weighted index of 100 NASDAQ-listed stocks.
27 QQQ3 @ $2444 Wisdomtree Nasdaq 100 3x Leveraged – tracks the NASDAQ-100® 3x Leveraged Notional Net Return index, providing three times the daily performance of the NASDAQ-100 Notional Net TR index, adjusted to reflect fees and costs inherent to maintaining a leveraged position in stocks.
28. SKYY @ $76.50 First Trust Cloud Computing – offers exposure to cloud computing stocks. Its index takes all stocks that fall into any one of three groups per its definitions: infrastructure as a service, platform as a service and software as a service..
29. SOCL @ $46.20 Global X Social Media – the only ETF on the market that focuses on social media companies. It caps the weights of pure-play social media companies at 10pc and the weights of non-pure play companies at 4.75pc.
30. WCLD @ $41.50 Wisdomtree Cloud Computing – tracks and index of US companies primarily focused on cloud software and services. Stocks are equal weighted in the index.
31. XITK @ $41.50 SPDR Factset Innovative Technology – tracks an index composed of U.S.-listed technology and electronic media companies deemed innovative or disruptive by FactSet.
32. XLK @ $107 SPDR Technology Select – tracks an index of S&P 500 technology stocks.
The key question is can the US stock market keep climbing. These are mysteries that no man can solve but both charts and fundamentals look good and there is a great deal of a scepticism around, which is paradoxically bullish. Many people and institutions still have funds to invest. My own feeling is that there is a long way to go, which is why I am still aggressively recommending ETFs to buy.
A newer development commented on in the last issue, where I recommended three China-focused ETFs, is the strength being shown by shares in businesses active in that country. My hunch is that exciting things are happening across the technology spectrum in China and subscribers should look for ways to be involved.
This is being reflected in some of the more general US technology funds. OGIG for example, has four Chinese stocks in its top 10 holdings.
The virus is not going away in a hurry but even so the global lockdown period is slowly but surely ending. People will have to look after themselves. This will make for caution and a continuing shift from an offline to an online world, which creates a strong tail wind for all technology-focused businesses.
