Here’s where an investor can find their favorite blend.
Whether you’re a new investor or a seasoned trader, chances are you’ve heard about the debate between growth and value. Growth stocks tend to be those that are increasing their sales or customers at an impressive clip. Value investing, on the other hand, is simply a quest to buy a good company at a fair price. It can be very hard to choose which path to go down with your portfolio. Both have risks, and both have potential rewards. If you see the virtues of both growth and value investing, then consider one of these “blended” exchange-traded funds that mixes these strategies so you don’t have to choose.
SPDR S&P 500 ETF (SPY)
It should be obvious, but the benchmark Standard & Poor’s 500 index is in itself a blended group of companies. After all, you have value-oriented consumer health giant Johnson & Johnson (JNJ) and utility stocks like Consolidated Edison (ED) alongside growth-oriented tech names like Facebook (FB) or biotechnology company Incyte Corp. (INCY). If you’re looking for a blended approach to the market, then look no further than this diversified index of the 500 largest U.S. corporations as your starting point.
Vanguard Mega Cap ETF (MGC)
You may think that given their laser focus on low-cost index funds, the folks at Vanguard aren’t really interesting in looking at quirky or unconventional ETFs that blend strategies. Well, think again — because building a blended ETF doesn’t have to be complicated. Take the MGC fund, which focuses on U.S. stocks representing approximately the top 70 percent of market capitalization. It cuts out the tiny companies, but still has a great mix of growth in powerhouses like Amazon.com (AMZN) and value in companies like Exxon Mobil Corp. (XOM). With the stability of huge corporations and a blended strategy, this is a stable and diversified fund suitable for any portfolio.
iShares Core S&P Total U.S. Stock Market ETF (ITOT)
Going in the complete opposite direction is the iShares ITOT fund, which aims to encapsulate both growth and value in every shape and size. With roughly 3,500 components and benchmarked to the Standard & Poor’s Total Market Index, this wide-reaching fund has a little bit of everything the U.S. stock market has to offer. The shortcoming here, however, is the fund is weighted toward the big guys. The top 10 holdings, which include big name stocks like Apple (AAPL), represent about 16 percent of the entire portfolio. So even though you do have a share of thousands of stocks, not all of them have the same pull.
SPDR S&P 600 Small Cap ETF (SLY)
If you’re more interested in making a bet on smaller companies, this SPDR fund is worth a look. It’s a blend of 600 growth-oriented companies like biotechnology firms or tech startups, as well as smaller value plays like regional banks and smaller industrials. In many ways, a small-cap ETF is the best way to find a blended strategy. Up-and-coming names that are under the radar often break out more than established players. And, relatively unknown and unloved firms often offer the biggest value for investors simply looking for a good company at a fair price. If you prefer small caps instead of chasing high-profile stocks, SLY is worth a look.
PowerShares Russell 1000 Equal Weight Portfolio (EQAL)
For those who want to avoid a fund biased toward any company, large or small, PowerShares offers an equal weight ETF benchmarked to the 1,000 largest U.S. corporations that make up the Russell 1000 index. As an equal weight fund, the fund regularly rebalances to ensure that all components have an equal place. And with 1,000 components, that really allows investors to avoid a bias towards any one sector as well as one company; the biggest share of assets are in technology with 14 percent followed by industrials at almost 13 percent and health care at 12 percent.
Vanguard Total International Stock ETF (VXUS)
What if you’re less concerned about size, and more concerned about geography? Well, Vanguard’s Total International fund gives you a great low-cost way to access a host of foreign markets and play both the growth and value investments there. This idea of blending your investments is an important one when investing overseas, because while some global markets can offer big-time growth potential they also can come with bigger risks. This blended fund holds a more than 6,000 stocks, so you can be sure that you’re diversified in your overseas investments.
iShares Multi-Asset Income ETF (IYLD)
If you really want to embrace the concept of a blended fund, then look at this income-oriented ETF that spans multiple asset classes from dividend stocks to junk bonds to preferred stock investments. This ETF is a classic example of a fund of funds, where this wide diversification is provided by iShares simply mashing up 10 of its more popular offerings into IYLD as a one-stop shop. But for investors who really want to have a blended and diversified strategy and would prefer not to worry about asset allocation, this may be a good investment solution.
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7 Blended ETFs to Own for a Diversified Portfolio originally appeared on usnews.com
