- You haven’t joined the ETF revolution yet? ETFs have more than $6.3 trillion in assets under management and countless options available, so don’t get left behind.
- Today, Nicholas Vardy explains why ETFs are the building blocks of your ideal investment portfolio.
It’s now been two years since I joined The Oxford Club as its first ETF strategist.
Interest in exchange-traded funds (ETFs) has continued to explode since then.
At the start of 2018, ETFs across the globe managed about $4.75 trillion. ETFs were already bigger than the entire hedge fund industry.
Today, global ETF assets have ballooned to $6.3 trillion.
U.S.-based ETFs alone manage $4 trillion in assets, with 136 ETF providers offering 2,062 ETFs to investors.
Globally, 219 providers launched 867 ETFs in 2019 alone.
U.S. regulators recently made it much easier to launch exchange-traded funds, so you can expect the number of ETFs to soar in the years ahead.
An ETF Primer
In my very first piece for The Oxford Club, I called ETFs the “Legos of the investment world.” (I later updated this piece in July 2019.)
Legos – the colorful, interlocking plastic bricks first made in Denmark in 1949 – come in all sorts of colors, shapes and sizes.
And like Legos, ETFs offer an astonishing range of asset classes, investment philosophies and niche trading strategies.
In the world of investing, ETFs allow you to custom build any portfolio you want.
Investing in ETFs could not be easier.
ETFs look, feel and trade like stocks. And like a stock, the price of an ETF changes throughout the day.
You can buy and sell ETFs in your brokerage account at the click of a mouse. And today, at most brokerages, you can invest in ETFs for free.
Technically, each ETF is an index fund. Each index tracks a major asset class, including stocks, bonds, fixed income, commodities and currencies – as well as derivatives such as options and futures.
Leveraged ETFs offer double or triple leverage on indexes and specific asset classes for short-term traders.
ETFs allow you to bet on these indexes – or against them.
ETFs also enjoy tax advantages over mutual funds.
When a mutual fund investor redeems their units or shares, the fund generates a taxable capital distribution. When an investor sells an ETF, they sell it to another investor, with no taxable distribution.
The Building Blocks of Investing
ETFs allow you to invest in just about everything under the financial sun.
Are you a committed buy-and-hold investor focused on low costs?
There is an ETF that invests in almost every U.S. stock and charges a tiny 0.03% per year. The $3 a year you spend on every $10,000 you invest costs less than a cup of Starbucks coffee.
Do you prefer to bet on the latest red-hot investment theme?
There’s probably an ETF for that – whether it’s blockchain or bitcoin.
Do you believe in a specific investment philosophy?
ETFs allow you to invest using time-tested strategies like the “Dividend Aristocrats” or the “Dogs of the Dow.”
Does the fear of a market crash keep you awake at night?
Dozens of ETFs allow you to bet against – or go short – the market.
How I Invest in ETFs
With more than 2,000 ETFs trading on U.S. stock exchanges, the choice can seem overwhelming.
As ETF Strategist and Editor of Oxford Wealth Accelerator – The Oxford Club’s ETF investment service – I guide you through the ever-expanding universe of ETFs by offering three (or four) ETF portfolios.
The Tactical Portfolio offers a range of short-term, often leveraged bets. Today, the portfolio includes a triple-leveraged bet on tech stocks, as well as a bet on the price of palladium.
The Strategic Portfolio consists of a wide range of investment strategies focused on the U.S. stock market. These strategies include everything from momentum to deep value to Warren Buffett-style “wide moat” stocks.
The Income Portfolio includes 10 income-generating strategies. These strategies range from high-dividend-paying global stocks to income from selling covered calls.
By offering a range of ETF portfolios, Oxford Wealth Accelerator can help you build your ideal portfolio using the Legos of the investing world.
As one subscriber to Oxford Wealth Accelerator put it, “Your ETF service is honestly the only service of Oxford that I’ve had real success with… and I’ve been with Oxford for a long time. Thanks.”
Interested in hearing more from Nicholas? Follow @NickVardy on Twitter.