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5 Hidden Gems ETFs

5 Hidden Gems ETFs

Haitham Sadek 0 Comments

Franklin LibertyQ U.S. Equity ETF (FLQL)

The problem with market timing is missing the best days. If you had missed just the five best days over the past 20 years, your returns would have been cut in half, explains Dan Muzzarelli, VP of institutional ETF business development at Franklin Templeton.

That’s why staying invested and staying the course is the most important thing you can do for your portfolio. FLQL, a $464 million multifactor U.S. large-cap ETF that weights stocks based on quality, value, momentum and low volatility, helps you stay invested.

It has 15% lower average risk than the investment universe.

ALPS Disruptive Technologies ETF (DTEC)

Everyone wants to invest in the next big technology theme, but why limit yourself to just one? The $48 million DTEC selects the top 10 most disruptive technology themes and equal-weights them.

It then takes the top 10 pure-play companies within each theme and equal-weights those (they have to have more than 50% of their revenues exposed to the theme).

The benefit of the strategy is that investors don’t have to bet on which disruptive tech company or theme will work over time.

Last year was a volatile year. The divergence in return between the top theme (health care innovation) and bottom theme (robotics and artificial intelligence)—was 45%.

Other themes in the DTEC basket include 3D printing, mobile payments, internet of things, clean energy, cloud computing, fintech, cybersecurity and analytics

ProShares Online Retail ETF (ONLN)

You’d have to be living under a rock to not know about the ascendance of e-commerce. Amazon is dominating, and brick-and-mortar retailers are struggling to stay alive.

That said, you may be surprised to learn that online sales are still a relatively small slice of the overall retail pie. Only about 10% of retail sales happen online, according to Simeon Hyman, global investment strategist at ProShares.

According to him, that share is expected to grow to 25% over the next two decades, as hundreds of millions of people around the world get connected to the internet for the first time (200 million people got their first mobile device in 2017).

With that growth trajectory, shares of online retailers should continue to rise, benefiting ONLN. The $33 million ETF tracks retailers that mainly sell online or through other nonstore channels. The fund is global in scope and uses a modified market-cap-weighted approach.

Holdings must have a market cap of at least $500 million; the largest company is capped at 25% of the portfolio; and U.S. exposure is likewise capped at 25% of the fund.

Davis Select International ETF (DINT)

If you’re looking for a concentrated, actively managed portfolio of international stocks with compelling growth and value characteristics, look no further than DINT.

The ETF has 32 holdings, taken from the best ideas of the Davis Advisors equity team. Thirteen countries are represented, with five-year average earnings per share growth of 20.4% and a P/E of 9.5—significantly cheaper than 12.1 P/E for the benchmark.

The $95 million fund avoids state-owned enterprises and focuses on two key themes: the growth of the online consumer; and the need to transport people and packages globally.

Knowledge Leaders Developed World ETF (KLDW)

Innovation isn’t limited to just technology companies. KLDW is an innovation fund, but one that focuses on innovation across all sectors and geographies.

Highly innovative companies tend to outperform, and the best way to measure innovation is by digging deep into expense ratios and finding those companies that are spending big on R&D and advertising (as a percentage of sales).

The $126 million KLDW does that, and then equal-weights the stocks of companies it finds that have a big stock of “knowledge capital.”

If you want to know more about all these 5 ETFs, go to ETF.com 

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