Our first recommendation is a small-cap fund whose top five holdings are: Chemed Corp (CHE, 0.66% of assets); Haemonetics Corp (HAE, 0.55%); FirstCash Inc (FCFS, 0.53%); ASGN Inc (ASGN, 0.52%); and Integra Lifesciences Holdings Corp (IART, 0.52%). Our second idea is a sale of a stock experiencing seasonal weakness.
Buy: iShares Core S&P Small-Cap (IJR)
From Dow Theory Forecasts
Exchange-traded funds (ETFs) have transformed investing, starting with the first one launched in 1993. Today nearly 1,900 ETFs trade, more than twice the number at the end of 2010. Their popularity reflects a growing preference for low costs and the ease with which the funds, by tracking indexes, allow access to broad swaths of the market. Importantly, ETFs regularly outpace actively-managed funds.
Sifting through roughly 1,900 ETFs is a daunting task and assembling a high-potential portfolio can be overwhelming for many investors. That’s where we come in. Using our fund rankings—computed monthly using total returns, expense ratios, and risk-adjusted performance metrics—we identified standout picks and constructed two all-ETF portfolios that roughly correspond to our Growth and Conservative portfolios. Both should appeal to frugal investors. Both portfolios have 14 holdings, matching our traditional portfolios.
Earning the maximum fund score of 100, iShares Core S&P Small-Cap (IJR) mirrors the S&P SmallCap 600 Index. On April 10, industrials represented nearly 19% of the portfolio, followed by financials at 17%. iShares Core S&P Small-Cap ranks among the top 6% of its peers based on three-, five-, and 10-year performance. The fund is up 1.9% so far in 2018. The expense ratio is a minuscule 0.07%.
Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, April 16, 2018