Let’s face it, stock picking is fun, exciting and offers investors who make wise decisions the biggest upside potential.
But as we baby boomers age, we may want to be a bit more conservative while staying in the stock-picking game. Think of it like playing pickleball for fitness instead of tennis. One way to do that is to pair stock picking with an ETF portfolio.
The Cabot Explorer offers you both worlds, blending stocks with exchange-traded funds (ETFs).
When I was an investment advisor, I put together custom ETF portfolios for clients based on their personal circumstances and goals.
But here are just four of the ETFs from my model portfolio to consider for 2024. They represent but a part of what I call my “pickleball” ETF portfolio. The goal is moderate risk and high upside potential over time.
4 Funds From My “Pickleball” ETF Portfolio
Invesco Russell MidCap Equal Weight (EQWM)
This equal-weight fund could turn out to be the surprise winner of this ETF buy list over the long haul. With EQWM, you enjoy the advantages of mid-cap stocks – they’re the largest segment of the U.S. stock universe, they deliver higher risk-adjusted returns than either small or large-cap stocks, and they represent growing but financially stable businesses. You also add an equal-weighting methodology, where all the stocks represented have an equal ability to contribute to the fund’s performance. Thus, a small allocation should provide the extra juice needed to grow your investments by more than the overall markets.
Invesco QQQ (QQQ)
The “Cubes” track the Nasdaq-100 Index. As one of the first exchanges to embrace computer trading back in the 1980s, the Nasdaq has long been home to companies focused on innovation. As such, the vast bulk of the index is made up of tech, consumer discretionary and healthcare firms.
The Nasdaq-100 tracks the largest domestic and international non-financial companies listed on the Nasdaq Stock Market. Tech makes up nearly 50% of the index, while consumer discretionary makes up around 22% of assets and healthcare comes in at roughly 7%. Because of its mix, QQQ represents a who’s who of growth stocks.
WisdomTree Artificial Intelligence (WTAI)
WTAI offers investors a diversified and comprehensive way to gain exposure to AI. Not only does it hold 76 different stocks, but it’s also not overly concentrated toward its top positions like some other AI-themed ETFs. Its top 10 holdings make up just 22.6% of the fund, which means that investors aren’t left overly exposed to the ups and downs of a few large holdings. Top position Nvidia accounts for just a 3% weighting, which is reasonable.
Another thing I like about WTAI’s holdings is that it invests across a wide-ranging swath of today’s AI universe. WTAI places its investment focus in AI across four key areas - AI software, semiconductors, hardware (which would include the likes of autonomous vehicles, drones, robotics, and industrial automation), and what it calls “innovation,” an all-encompassing category that could include any company using AI to disrupt existing industries.
WisdomTree Emerging Markets High Dividend Fund (DEM)
This ETF offers a high dividend yield and some of the highest-quality emerging market stocks. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index.
Expanding Beyond an ETF Portfolio
Oftentimes, you can look “under the hood” of an ETF and then pick one of its stock holdings that you think offers the best opportunity.
For instance, if you’re interested in adding individual financial stocks beyond your ETF portfolio, you could begin by looking at…
Financial Select Sector SPDR Fund (XLF)
This ETF offers broad exposure to the financial sector through quality companies led by the below list.
- Berkshire Hathaway Inc. Class B (BRK.B)
- JPMorgan Chase & Company (JPM)
- Visa Inc. Class A Shares (V)
- Mastercard Inc. (MA)
- Bank of America Corporation (BAC)
- Wells Fargo (WFC)
- S&P Global Inc. (SPGI)
- Morgan Stanley (MS)
- Goldman Sachs Group Incorporated (GS)
- BlackRock Inc. (BLK)
You can appreciate that stock picking and ETF investing can go hand in glove – if you have the right global perspective and strategy from the Cabot Explorer. Click here to learn more.