Today, the Undiscovered Portfolio sold three ETFs for the following reasons:
- ProShares K-1 Free Crude Oil Strategy (OILK): The price of oil has been rising recently, boosting this ETF. The price gapped up Thursday morning, due to the situation in Russia and Ukraine. However, shares reversed lower during the session, so we are exiting with a profit.
- Invesco S&P SmallCap Quality (XSHQ): This ETF broke support below key moving averages so we are exiting to cap losses.
- SPDR Global Dow (DGT): As equity markets fell sharply due to the Russia-Ukraine situation, this ETF also broke support, so we are selling to minimize losses.
We are maintaining the 10% position in the ProShares Short MSCI Emerging Markets ETF (EUM), which boasts a 7.8% return since February 8.
The following ETFs are added to the portfolio today for these reasons:
- Invesco Dow Jones Industrial Average Dividend ETF (DJD): 40%: The Invesco Dow Jones Industrial Average Dividend ETF is based on the Dow Jones Industrial Average Yield Weighted index. In times of market weakness, dividend-paying equities are a good way to generate return. We are deliberately buying this fund off its highs, as our backtesting indicates this has potential to rise in the near term.
- ALPS International Sector Dividend Dogs ETF (IDOG): 30%: This ETF gives you exposure to dividend payers in non-U.S. developed markets. After a break during the pandemic, ex-U.S. companies have resumed dividend payouts at a healthy clip. This ETF is benchmarked to the S-Network International Sector Dividend Dogs Index, which is currently yielding 4.45%, well above what investors earn with the MSCI EAFE Index. This, too, is trading below key support levels, but rising intraday. We’re taking this opportunity to buy at a low valuation.
- Direxion Daily S&P 500 Bear 1X Shares (SPDN): 20%: This ETF seeks a return that is 100% the inverse of the S&P 500 benchmark index for a single day. According to fund literature, “The fund should not be expected to provide 100% of the inverse of the benchmark’s cumulative return for periods greater than a day.” In plain English, this means that on any given day, this ETF will return the exact opposite of the S&P 500. During the current market downturn, we’ll use this to capture a positive return.