Some ETF Ideas for August 2024

DISCLAIMER - I am not a Financial Advisor and do not work for any Brokerage Firm. The opinions given are my own and are not to be used as professional advice. These are my findings and can hopefully help you make informed decisions on investing. Consult a Broker or Lawyer before making any investment.

Some ETF Ideas for August 2024

I am always looking for good ideas on investments. I came across two articles this week that both were excellent. One was on Fidelity Investments and I want to focus on it today. They pointed out that for the first time in quite a while, small cap ETFs are outperforming Large Growth ETFs in this last quarter. One of the cardinal rules of investing is to never put all your eggs in one basket.

No matter how great technology stocks are, you want to keep some balance and diversify across all different sectors. If you are unfamiliar with ETFs, they are Exchange Traded Funds. Like Mutual funds, most of these are across some large index of certain types of stocks or bonds. So you want some Large Growth, some Mid-Cap ETFs, plus Small-CAP ETFs, plus Foreign Stock ETFs and Bond ETFs. We have articles explaining each of the categories on our website.

What Are ETFs?

Great article on ETFs at Fidelity Investments

I own many, many ETFs in our 3 ROTH IRAs at Fidelity and Schwab. Many of the ETFs listed in this Fidelity Article are ones I already own. But always review what stocks an ETF is invested in and compare its returns to others in the same class. No two will give the exact same return, but I try to get above 12% returns on an average yearly basis.

Here is a list of the Fidelity Recommendations on Small Caps

As previously noted, small-cap stocks have outperformed large-cap stocks over the past several weeks. Some investors have been touting the potential for small caps based on attractive valuations and the proclivity for market leadership to rotate over time. If you are interested in small-cap ETFs, you can explore the small-cap blend theme on Fidelity.com. Here are the top 10 results sorted by net assets, as of July 25, 2024:

iShares Core S&P Small-Cap ETF IJR)

iShares Russell 2000 ETF (IWM)

Vanguard Small-Cap Index Fund ETF ( VB)

US Small-Cap ETF ( SCHA)

SPDR Portfolio S&P 600 Small Cap ETF (SPSM)

Vanguard Russell 2000 Index Fund ETF Shares ( VTWO)

Schwab Fundamental US Small Company Index ETF ( FNDA)

Dimensional US Small Cap ETF ( DFAS)

Vanguard S&P Small-Cap 600 Index Fund ETF Shares ( VIOO)

Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ)

After running a screen that you think is generating investments that match what you are looking for, you can then dig deeper. For example, you should be comfortable with the risk that any investment brings. Small caps are inherently more risky than large caps, so these small-cap ETFs require a little extra due diligence to understand what you are considering owning.

Recommendations on Large Cap ETFs

Despite calls for small caps to catch up, large caps are on a multiyear market leadership run. If you have a positive view on large-cap stocks, you could consider the large-cap blend ETF screen on Fidelity.com. Here are the top 10 results sorted by net assets, as of July 25, 2024:

SPDR S&P 500 ETF Trust ( SPY)

iShares Core S&P 500 ETF ( IVV)

Vanguard S&P 500 ETF ( VOO)

Vanguard Total Stock Market Index Fund ETF Shares (VTI)

Vanguard Dividend Appreciation Index Fund ETF Shares ( VIG)

iShares Core S&P Total US Stock Market ETF (ITOT)

Invesco SYP 500 Equal Weight ETF (RSP)

iShares MSCI USA Quality Factor ETF (QUAL)

Schwab US Large-Cap ETF (SCHX)

SPDR Portfolio S&P 500 ETF (SPLG)

Fidelity Recommendations on Bond ETFs

Although bond performance hasn’t matched that of stocks thus far in 2024, some investors think it’s a great time for bonds. If you are interested in adding bond ETFs to your investment mix, there are several bond ETF screens you could consider—including the intermediate core bond fund screen, which invests primarily in investment-grade fixed income investments, such as government, corporate, and securitized debt issues. Here are the top 10 results, sorted by net assets, as of July 25, 2024:

iShares Core US Aggregate Bond ETF (AGG)

Vanguard Total Bond Market Index Fund ETF Shares (BND)

iShares Core Total USD Bond Market ETF (IUSB)

Intermediate-Term Bond Index Fund ETF Shares (BIV)

Fidelity Total Bond ETF (FBND)

SPDR Portfolio Aggregate Bond ETF (SPAB)

Schwab US Aggregate Bond ETF (SCHZ)

Dimensional Core Fixed Income ETF (DFCF)

First Trust TCW Opportunistic Fixed Income ETF (FIXD)

Pimco Active Bond Exchange-Traded Fund (BOND)

Given the relatively unique aspects of bond ETFs, it may help to first understand how bond ETFs work. Compared with bonds and bond mutual funds, bond ETFs have unique characteristics, including intraday trading and holdings transparency. Moreover, you should understand an ETF's components, which you can find on its ETF snapshot page on Fidelity.com, under Portfolio Composition. On that page, you can also find the ETF's style (value, growth, or blend) and size (large, mid, or small), as well as ratings and key statistics. Investing in bonds involves risk, including interest rate risk, inflation risk, credit and default risk, call risk, and liquidity risk.

These should give you a good starting place to begin studying which ETFs might be good for your portfolio. Takes a lot of study to develop a solid portfolio that makes consistent returns. Always remember to keep a diverse portfolio with all types of investments.

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