Good year! It is the day before before the day before the end of 2021. In other words, it is the last edition of ETF Wrap of the year before relaunching it. Barring a crystal ball, we’re going to offer some ideas from the folks at Astoria Advisors on what to buy next year.
We’re going to keep it short and sweet.
And as usual, send any tips or comments, and find me on Twitter at @mdecambre Where LinkedIn, to tell me what we need to cover, or share your 2022 outlook for the industry. We will try to publish a few as we have them.
Most importantly, register here for ETF wrap sent fresh to your inbox every week (make it a New Years resolution).
To verify: What is an ETF? We will explain.
|Top 5 winners from last week||%Performance|
US Oil Fund LP USO,
iShares MSCI Sweden ETF EWD,
AdvisorShares Pure US Cannabis ETF MSOS,
Invesco Dynamic Semiconductors ETF PSI,
Consumer Discretionary Select SPDR Fund XLY,
|Source: FactSet, until Wednesday, December 29, excluding ETNs and leveraged products. Includes ETFs traded on NYSE, Nasdaq and Cboe of $ 500 million or morer|
… and evil
|Top 5 drops from last week||%Performance|
ARK Genomic Revolution ETF ARKG,
First Trust Global Tactical Commodity Strategy Fund FTGC,
Vanguard Total BNDX International Bond ETF,
SPDR S&P Biotech ETF XBI,
ARK Innovation ETF ARKK,
ETF for 2022
Yield, returns and income. This seems to be the main takeaway from our discussions with John Davi, founder of portfolio strategist Astoria Advisors. We’ve gone through some of Astoria’s calls for 2021, and Davi has come up with a few ideas for next year that are worth checking out, given the times.
Davi’s calls shouldn’t be taken as investment advice, but it’s always interesting to garner a perspective based on where some of the pros are putting their money.
Net, net, net
David says Netlease Corporation Real Estate ETF
is a good bet because real estate investment trusts focused on net leases offer predictable sources of income. A net rental agreement is a long-term contract in which the tenant is responsible for most or all of the real estate expenses, Davi explains. Real estate is generally considered a good bet on inflation. NETL, which launched in 2019, grew 22% in 2021 and has an expense ratio of 0.60%. This translates into an annual expense of $ 6 for every $ 1,000 invested.
The next pick (actually a pair) is another understated selection that emphasizes consistency rather than fanfare. SPDR S&P Dividend ETF
and SPDR S&P 500 High Dividend ETF Portfolio
Consistently offering low cost, high yield ETFs for ordinary people in an age when the volatility that grieves you can be too much to handle. “SDY and SPYD track the returns of the S&P High Yield Dividend Aristocrats Index and the S&P 500 High Dividend Index, respectively, while providing a healthy dividend in between,” writes Davi. SPYD has an expense ratio of 0.07%, has assets of over $ 5 billion, and was up 28% with a dividend of 3.7%, as of the last check Thursday at noon; while SDY charges 0.35%, manages over $ 20 billion, and has gained 22% in 2021 so far, while touting a 2.64% return.
- Global X NASDAQ 100 Covered Call ETF
is a more sophisticated selection, which Davi says makes sense in a market where high stock valuations and volatility are expected. Covered buy funds sell call options, which give the owner the right but not the obligation to buy a stock at a fixed price (the strike price) within a certain time frame. The term “hedged” refers to the fact that the fund holds the underlying stocks represented by the options. The idea here is that investing acts as a kind of insurance, especially during volatile markets, where funds collect premiums on the calls they sell, which in turn are distributed to shareholders. The purchase income limits the inconvenience to the investment and investors can benefit from the rise in the value of the target stocks. QYLD has traded down 2.4% so far in 2021, but it has a payout yield of 11.4% with an expense ratio of 0.60%.
It is worth mentioning the Eaton Vance Tax Managed Buy-Write Income Fund
offers a similar strategy and is up 15% year-to-date, despite being a closed fund and over 1% more expensive. It offers a distribution of around 8%.
David recommends Blackstone SPDR Senior Loan ETF
and VanEck Muni High Yield ETF
because there is uncertainty about how quickly the Federal Reserve will act to raise interest rates in its fight against price pressures.
“Has yields of 4.5% and 3.6%, respectively, SRLN and HYD have attractive income characteristics, ”Davi wrote. SRLN, which started in 2013, has an expense ratio of 0.7% and provides exposure to non-investment credit variable rate corporate debt of US and international corporations. Meanwhile, HYD carries an expense of 0.35% and tracks a market-weighted index of high yield municipal bonds. It has been around since 2009.
And one more thing
Astoria joins forces with AXS Investments to launch what Davi describes as the very first “Global Multi-Asset ETF Dedicated to Protecting and Profiting from Rising Inflation”. the AXS Astoria inflation sensitive ETF includes a mix of inflation-sensitive stocks, ETFs including commodities, inflation-protected Treasury securities or TIPS, cyclical stocks such as industrials, materials, banks, home builders and more. As Davi puts it, “TIPS while raising significant assets since the start of the year are just not enough to hedge the inflation risk for the 60/40 portfolios,” referring to the model portfolio mix. traditional stocks and bonds. The fund will trade on the NYSE Arca platform of the New York Stock Exchange owned by Intercontinental Exchange and will have an expense ratio of 0.71%. Cyclical stocks will make up the bulk of the ETF.
How’s the anti-Cathie Wood?
Matthew Tuttle is a little surprised that an anti-Cathie Wood ETF that launched in mid-November hasn’t attracted more influx. ARK Innovation ETF ARKK, the flagship of the flagship investor, is down for the year, even as the broader market sets new records for the S&P 500 SPX index,
“I’m surprised,” Tuttle told MarketWatch in an interview Tuesday.
Read more about it here.