Smart-Beta ETFs Growing in Popularity

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
[Stock traders]

The Smartest Investors use Smart-Beta ETFs

What’s the biggest trend in ETF land these days?

It’s called smart-beta ETFs.

These ETFs provide a twist on traditional indexed ETFs, and they’re an interesting alternative to traditional, market-cap-weighted index funds.

One of the most common types of smart-beta funds are those that offer equal weighting, meaning each stock counts the same in an index. Funds such as the Guggenheim S&P 500 Equal Weight ETF (RSP) invest in the same companies as the traditional market-cap-weighted S&P 500 index, but unlike the market-cap-weighted index, RSP doesn’t weight the likes of Apple or Microsoft more than smaller index components.

RSP_022015

By equal weighting, the smaller-cap, lesser-known S&P 500 companies get treated the same as Apple, which now is the largest component of a market-cap-weighted S&P 500 fund.

Another type of smart-beta fund is one that siphons out volatility, such as the PowerShares Low Volatility ETF (SPLV). By holding the stocks with the least volatility in the S&P 500, this fund allows more conservative investors to sleep just a little bit better at night.

SPLV_022015

The popularity of smart-beta funds of late has really been a notable trend in the market. In fact, about 60% of capital flowing into ETFs during the past couple of years has gone into some sort of smart-beta fund.

That, my friends, is a smart trend that I think will continue for some time.

So, be smart: use smart-beta ETFs.

Who Needs a Bank?

Are you old school? Do you still have an account with one of the money center banks?

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If so, you might want to think about jettisoning that relationship and getting your banking services from your brokerage firm.

These days, companies such as Schwab, Fidelity and TD Ameritrade all offer banking services that are as good, or even better, than those offered by traditional banks such as BofA, Citigroup or Wells Fargo.

Often, the cost of services such as checking, debit cards, etc., are far less at brokerage firms than they are at banks. Plus, if you invest in stocks, mutual funds and ETFs, then your brokerage account is much better than any account you would have at a money center bank.

The bottom line is that today, you just don’t need a bank anymore.

So, make your life a little easier, and check out for yourself how your brokerage firm’s banking services can help you consolidate and simplify your financial life.

Top 10 ETFs for 2015

The start to the 2015 market certainly has been a wild ride.

Steep declines in stocks due to a huge drop in oil prices characterized most of January, but a February rally by the bulls brought stocks back to new highs in the S&P 500 and turned the tables on the timid bears.

Now, more than ever, you need to be equipped with the knowledge required to take advantage of what this market throws at you — and one of the best ways to do that is to know which exchange-traded funds (ETFs) can give your portfolio the edge against uncertainty, volatility and the prevailing trends in the equity, bond and commodities markets.

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To help you identify the best of the best ETFs for 2015, we’ve put together a special YouTube video presentation:

Top 10 Best ETFs for 2015

In this insightful presentation, you’ll find out which ETFs we think are poised to deliver outstanding performance this year. More importantly, you’ll find out all about the underlying trends operating in the market right now and why these trends are likely to propel these specific ETFs higher during the next 11-plus months.

Whether your main investment objective is to grow your assets or to generate income from existing assets, the “Top 10 Best ETFs for 2015” has something for you.

See which ETFs made the list.

NOTE: Fabian Wealth Strategies is a SEC registered investment adviser, and is not affiliated with Eagle Financial Publications.

Hayek Wisdom

“‘Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.”

— Friedrich August von Hayek

Whenever you hear politicians take “emergency” action, you’d better keep a sharp eye out on your money — and your freedom.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about comparing international and domestic ETFs. I also invite you to comment in the space provided below.

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previous article

Today we’ll discuss an emerging-market you may find appealing -- the iShares MSCI Emerging Markets ETF (EEM).

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