I’m on the lookout for a new ETF to invest in. I’m currently in one that tracks the Dow and has a low expense ratio. I have about $6,500 currently in the stock symbol, DIA. It’s a great fund for low cost exposure to the performance of the Dow. Obviously the market hasn’t been the best over the past year, but I’m 27 years old and I’m looking at these ETFs as long term investments.
I’ll start by saying that I am not looking to replace my DIA investment. I have plenty of money that is not currently invested but I would like to at least put a portion of it somewhere. Probably another $6,500 or so into another ETF. My focus so far has been on technology ETFs. I’m looking for exposure to a more defined segment as opposed to DIA. The technology sector incorporates some of my favorite stocks and being able to invest in a fund that has holdings in these same companies would be amazing.
I like Microsoft as a solid blue chip stock, and would like to see it included. Apple has been on my “concerned” list this past year. For 2016 and 2017 I purchased shares ahead of the new iPhone releases…For 2018 I did not. I made a good return in both previous years, but had I invested in 2018, I would have lost money in the same investment time frame. I didn’t know for sure how the phones would do this past year, but my gut just said stay away from the stock as a short term investment. When looking at it long term the bottom line is that Apple has an enormous amount of cash and should be financially stable for the foreseeable future. That still doesn’t mean it will have the same hype for it’s equity shares, but I still believe it’s a solid company. If only I had a crystal ball to be sure…
I’ve also always enjoyed keeping an eye on some semiconductor stocks. NVIDIA (NVDA) is one I’ve been watching for a while. As someone who has always loved gaming, I gave PC gaming a chance 3ish years ago. I had the latest and greatest NVIDIA graphics card at the time and my gaming PC was kick ass. I had a lot of fun back then, and as for the stock, it was climbing and climbing and climbing. Despite the insane amount of stock price increases I never actually bought any shares. Last year the climb came to an end and the stock lost about half of it’s value. While there are safer plays out there, I like the stock as a growth opportunity…meaning to say as a long term investment. There are a lot of areas of technology beyond that of gaming computers where NVIDIA can play a massive role in the coming years. Other than NVIDIA I’ve “somewhat” followed other semiconductor stocks such as NXP and Micron, but not as closely and I can’t speak to them without some research to get me up to date on their current status’s.
So far my first choice for my next investment is the Vangaurd Information Technology ETF (VGT). Microsroft and Apple make up a large portion of the fund, AND both NVIDIA and Micron are part of it. NXP could be, but in the list I skimmed of it’s holdings I did not see it. Among these there are also some other stocks I like such as Visa, Oracle, Cisco, and FireEye. As a fun little note, Cisco and Oracle were two of the first 5 stocks I ever purchased years ago.
I like the fund because it’s low cost at 0.10% expense ratio (or 10bps). It also has a distribution yield of 1.2%, which at the end of the day can’t be considered impressive but I’m more focused on the capital gains anyway. In total the fund has around 320 holdings which gives me the exposure that I desire. This ETF carries a P/E ratio of over 23, which at this point I don’t know how that compares to similar funds, but I’ll learn more in my research. And lastly this is a Vangaurd fund, which is a name that carries some serious weight. For those who might not have known…the founder of The Vangaurd Group, John “Jack” Bogle, passed away only earlier this year. His name was one of many that I came to know in my time of learning about investing and the stock market.
The current price of the ETF is just over $202 per share as of Monday, April 1st, and it has over $21 billion in net assets. I have reviewed some other ETFs with similar holdings, but the expense ratios are higher and in same cases the yields are lower, especially relative to the increased expenses.
I hope that perhaps this post can help anyone else seeking a similar investment, or at least spark some discussion on similar funds if anyone has any suggestions. I plan to make my decision within the next week or two.