Is SPDR S&P 500 ETF a Good Investment?

Over the past few decades, many institutional and retail investors have increasingly turned to passive ETFs because they cater to a more hands-off approach. Additionally they offer lower costs, transparency, flexibility and are tax efficient. SPDR S&P 500 ETF is one such ETF on many investors’ radar. But, is SPDR S&P 500 ETF a good investment? Let’s examine this popular ETF to find out.

What Is SPDR S&P 500 ETF?

The SPDR S&P 500 ETF or SPY ETF tracks stocks in the S&P 500 Index as measured by market capitalization. These include 500 of the largest (large-cap) publicly traded U.S. companies across all 11 GICS sectors. In January of 1993, State Street Global Advisors began trading the SPY ETF. It was the first ever ETF listed in the United States.

With a trading volume of around 73 million, the SPY ETF is extremely popular. Stocks in the SPY ETF are chosen by a committee with considerations for market size, liquidity and strength of industry. Currently the fund carries a lot of big tech stocks, such as Apple Inc (Nasdaq: AAPL), Microsoft Corporation (Nasdaq: MSFT) and Google – Alphabet Inc Class A (Nasdaq: GOOG).

The performance of the S&P 500 is a primary indicator of the health and stability of the United States economy. The SPY ETF has been through three recessions, bull and bear markets, as well as the longest economic expansion in U.S. history.

SPY ETF Overview

• 10-Year Performance 11.04%
• Expense Ratio: 0.09%
• Yield 1.91%
• Number Of Stocks: 506
• Top 10 Holdings: 25.1%

What Does “SPY” Stand For?

Why Are Reddit Investors Buying SPY ETF?

When you think of Reddit, and subreddits for investors, what’s the first thing that comes to mind? I’m betting it’s not diversification or risk management. But that’s exactly what we’ve been seeing lately. SPDR S&P 500 ETF is trending on Reddit ahead of stocks like GameStop Corp. (NYSE: GME) and Tesla Inc (Nasdaq: TSLA).

Recently Reddit and other social platforms decided to make Bed Bath & Beyond Inc (Nasdaq: BBBY) their latest meme stock. We all saw how that worked out. BBBY stock has fallen 70% and as I wrote earlier this week…

Bed Bath & Beyond has continued its massive downsizing. This week, the company released a list of the first 56 stores that would be closing. Leadership had previously stated that the closing of 150 of their “lower-producing” banner stores would be part of the ongoing changes. In addition to the store closings, Bed Bath & Beyond has released more than 20% of their staff.

So needless to say, that hasn’t worked out so well. Many of those impulsive meme investors may be looking to improve their chances of success. So, have Reddit investors traded in their meme stock tendencies for sound, diversified investing? Or is this simply a reaction to the ongoing bear market? Only time will tell, but it is refreshing to see nonetheless.

Is SPDR S&P 500 ETF a Good Investment?

The SPDR S&P 500 ETF does not come with zero risk. If fact, it’s considered to be suitable for investors looking to take on a moderate degree of risk. However, the SPDR S&P 500 ETF Trust has a four-star Morningstar rating and has generated an average annual return of around 10% since inception. And as we’ve seen in the past, regardless of what is happening in the world, the S&P always seems to recover from downturns.

Rather than hand-picking stocks or bonds for the fund, a fund manager buys all of the assets that the index tracks. So instead of you having to worry about diversification and tracking dozens of stocks, the SPDR S&P 500 ETF removes all the guesswork. This is a huge benefit that comes alongside a great track record. SPY ETF has a current expense ratio of 0.09%, which is the ETF equivalent of fund management fees.

SPDR S&P 500 ETF Dividend

SPY has a dividend yield of 1.65% and paid $6.18 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Sep 16, 2022.

SPDR S&P 500 ETF Top 10 Holdings

SPY Sector Weightings (%)

Final Thoughts on SPDR S&P 500 ETF

Since the SPDR S&P 500 ETF replicates the S&P 500 Index, it is ideal for passive index investing. Additionally, the fund does have a 1.65% dividend yield, making it an even more enticing buy. And with an average annual return of 10% it’s ideal for buy and hold investors.

If you’re an investor in the S&P 500, you may want to consider following IU Einstein Alexander Green. Since Alexander Green’s first recommendation in 1999, the average Oxford Communiqué (our flagship newsletter) position has returned 23.61%, versus the S&P 500’s average return of only 10.74%… That’s more than DOUBLE the returns of the S&P 500.

Is SPDR S&P 500 ETF a good investment? For the answer to this question and more, consider signing up for one of our free newsletters. Visit our best investment newsletters page and select a mailing that works for you. Join today to become a smarter, more profitable investor.

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Smart Beta Investing Has Underlying Problems

Whether markets are up or down, investors are always looking for ways to beat the odds. Everyone wants to feel like their investing strategy is as solid as it possibly can be, regardless of the market conditions. One such strategy is a smart beta investing approach.

What is Smart Beta Investing?

Roughly fifteen years ago, a professional services firm called Towers Watson coined the term “smart beta.” However, the term was around long before that, dating back to the 1970s. It took more than 30 years for the first beta ETF to launch in 2003. Since then, smart beta fund managers have been tweaking and refining their investment strategies and methodologies.

According to ETF.com, “with 1,209 ETFs traded on the U.S. markets, Smart Beta ETFs have total assets under management of $1,574.77B. The largest Smart Beta ETF is the Vanguard Value ETF VTV with $101.00B in assets.”

Smart beta refers to enhanced indexing strategies that seek to exploit certain performance factors in an attempt to outperform a benchmark index. Smart beta investing is essentially a combination of both active and passive investing. Taking the best of the two for the most optimal outcome.

Smart beta aims to give investors an edge by lowering risk, increasing diversification and decreasing overall cost. All this while creating the most optimal portfolio possible. Efficiency and value are the two main points of interest. At least one or more of these factors are rolled up into customized indexes or ETFs. However, as IU Einstein and Quantitative Expert Nicholas Vardy explains…often the instant a smart beta strategy is introduced through an ETF, it stops working.

The Underlying Problem

Just last month, Nicholas Vardy wrote an article for Liberty Through Wealth called “The Underlying Problem with Smart Beta ETFs“. In it he explains some of the less noted issues with the investing approach.

“These smart beta ETFs bet on factors like momentum or the Dividend Aristocrats to beat the market. Each of these strategies is backed by research conducted at the world’s leading investment firms and business schools. Yet I’ve been disappointed by the real-world performance of smart beta ETFs. It seems that the instant a strategy is introduced through an ETF, it stops working.”

Nicholas goes on to reference an essay from Stanford Medicine professor John Ioannidis, called ‘Why Most Published Research Findings Are False”. In it, Ioannidis reveals how the “results published in many medical research papers cannot be replicated by other researchers.” Ioannidis’ financial counterpart, Campbell Harvey, a professor of finance at Duke University, estimates that “at least half of the 400 “market-beating” strategies identified in top financial journals over the past years are worthless. He challenges academics to take any so-called winning strategy and ask a different set of researchers to replicate it. And chances are about 50-50 that they can’t. Even worse, Harvey argues that his fellow academics are in complete denial about the problem.”

Data Manipulation

Vardy then goes on to talk about how smart beta data can be manipulated…

“In statistics, a p-value represents the probability that a finding is statistically significant – attributable to an actual factor and not pure chance. For example, it will show whether a particular drug works or whether value stocks outperform over time.

The problem is this: Researchers twist the data – blatantly or subconsciously. They may cherry-pick the metrics used or adjust the time period studied to obtain a statistically significant result. We can blame “the system” for this problem.

Young finance professors can publish a paper with an eye-catching find in a prestigious journal – and they just might get tenure. As a result, investment strategies that look terrific on paper often flop in the real world.”

Smart Beta Investing – Summarized

As Nicholas and others have pointed out, many of the strategies surrounding smart beta investing are quite impressive. However, now that the term smart beta has been around for more than a few decades, it has lost some of its magic. The real world performance of smart beta ETFs has often missed the mark.

To learn more about smart beta investing, value investing, insider trading and more…sign up for one of our free e-letters today. Just visit our best investment newsletters page and select a free mailing that fits your investing style. If you’d like to follow more of Nicholas Vardy’s work, sign up for Liberty Through Wealth today.

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The 3 Best Healthcare ETFs to Buy

The U.S. healthcare industry is monstrous. In 2020, Americans collectively spent a combined $4.1 trillion on healthcare according to information from Insider Intelligence. With 330 million U.S. citizens, this comes out to approximately $12,400 per person. Additionally, thanks to an exponentially growing population, this market is likely not slowing down anytime soon. Analysts expect that the U.S. healthcare industry could grow to as much as $6.2 trillion by 2028. This means that identifying the best healthcare ETFs to buy should be a big focus for investors over the coming years.

Benefits of Healthcare ETFs

An exchange-traded fund (ETF) is a fund that invests in a large portfolio of securities. ETFs are designed to track a particular index, sector, commodity, or asset. The most common example of an ETF is the SPDR S&P 500 ETF. Furthermore, this fund tracks all the companies in the S&P 500. The ETFs listed below all track companies that operate in the healthcare industry.

There are plenty of benefits to investing in ETFs. To start, buying shares in one of the ETFs below will instantly diversify your portfolio. Instead of owning one or two healthcare stocks, you can invest in the entire industry. One way to envision this is to think of a fruit bowl. Instead of buying one whole piece of fruit, you can buy a fruit bowl. With a fruit bowl, you get a few slices of many different types of fruit.

ETFs are also lauded as a more reliable alternative to stock picking. Investing in ETFs reduces the time, stress, and risk of picking stocks yourself. If you prefer to, you can spend hours researching all the different healthcare companies. Or, on the other hand, you can just buy an ETF and get exposure to the entire industry.

Last, ETFs are known for having incredibly low fees. Over time, investing in low-fee funds can greatly enhance your total return.

With that in mind, let’s examine the three best healthcare ETFs to buy. To come up with this list, I selected the three largest ETFs based on total assets under management (AUM). “Assets under management” is the total amount of money that the fund manages for investors. In general, larger funds are likely to be more reliable.

No. 3 Health Care Select Sector SPDR Fund (NYSE: XLV)

Assets Under Management: $38.6 billion

The Health Care Select Sector SPDR Fund is by far the biggest healthcare ETF. In fact, it’s over twice as large as the next biggest fund. This, by itself, qualifies it as one of the best healthcare ETFs to buy. The Health Care Select Sector SPDR Fund seeks to give investors exposure to the overall healthcare industry. It does this by investing in companies that operate in pharmaceuticals, health care equipment, biotechnology and healthcare providers. The bulk (28.4%) of the fund’s holdings are companies that operate in the pharmaceutical space.

This fund’s top holdings are UnitedHealth Group, Johnson & Johnson, Pfizer, AbbVie and Thermo Fisher. It’s down 6% so far YTD but up 63% over the past five years.

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How to Short Crypto: Four Ways to Capitalize off Market Downturns

The crypto markets have been in a freefall since hitting highs in late 2021. And many folks think things are poised to continue to fall amidst the current crypto winter. Some crypto tycoons like Richard Heart (the guy behind Hex and PulseChain) think this correction could drag Bitcoin all the way back down to $11,000 a token. If that turns out to be true, knowing how to short crypto could be a very lucrative proposition. And we’re here to help.

Just a couple years ago, the idea of Bitcoin hitting $11,000 would be cause for celebration among crypto devotees. But for those that got in at the height of the recent crypto boom, it could feel catastrophic. Which is why we’re going to show you four ways to try and make up some of those losses should Bitcoin continue its downward trajectory.

How to Short Crypto No. 1: Margin Trading

Crypto purists may not be too enthusiastic about centralized exchanges. But crypto’s growing popularity made it a necessary evil to draw in more folks. Anyone that’s stumbled through the annoying process of buying crypto on decentralized exchanges should get it. Plus, they made it easier than ever to trade fiat currency for digital coins.

But in addition to simplicity, most centralized exchanges allow for margin trading. Now typically, margin trading is done to maximize returns on upward movement. However, some exchanges like Kraken and Binance allow folks to borrow tokens outright. From here, folks can then sell those tokens right back on the market.

Eventually, the brokerage is going to want their tokens back though. If the tokens continue to go down in value, that’s not a big deal. You just buy them at the (hopefully) lower price. Then once you return them, you can simply pocket the difference. When it comes to learning how to short crypto, this is probably the easiest. And it doesn’t require signing up for new accounts with another service. You can learn more about margin trading here.

Short Strategy No. 2: Futures Markets

When Bitcoin and its crypto brethren went big in 2017, it grew so popular that a futures market was built around some of the larger tokens. These days, the Chicago Mercantile Exchange (CME) allows folks to short crypto. Here’s how it works…

To short crypto, you essentially sell a futures contract. This is a bet that the price will go down in the future. Here, someone buys the contract from you for the going price of a token. Then when they demand their cryptocurrency contract filled by the seller, he or she would simply buy the tokens at the lower price and fulfill their end of the obligation, pocketing the difference.

These days, it’s not just the CME that offers derivatives trading. Popular exchanges like Kraken, eToro and even TD Ameritrade offer ways to trade futures contracts now. In fact, this might be an even easier way to learn how to short crypto for folks that are unfamiliar with some of the popular crypto exchanges. And if you’d like to learn more about futures trading, just follow this link.

The Big (Crypto) Short No. 3: Inverse ETFs

Those familiar with the stock market should know there’s an ETF for seemingly everything. Betting inflation will continue to rise? There are a whole bunch of them to invest in. Think space travel stocks are about to see a boon in popularity? Look no further than the Procure Space ETF (Nasdaq: UFO). So naturally, there are several of them based on profiting from Bitcoin’s breakdown.

One of the first inverse crypto ETFs to hit the market was BetaPro Inverse Bitcoin ETF, which is traded on the Canadian stock exchange. Since then, the ProShares Short Bitcoin Strategy ETF (NYSE: BITI) has been launched here in the U.S. And there are likely more to follow soon.

And now that you’ve learned how to short crypto the three easiest ways, we’ll close out with one with a bit more of a learning curve…

Short Play No. 4: Prediction Markets

You’re probably aware that you can go to the FanDuel website or pop open the Caesars Sportsbook app on your phone to bet on sports. If you want to try and predict who’s gonna win the Superbowl, the World Series or the World Cup, it’s that simple. Guess right and you can be handsomely rewarded. Well, there’s a similar process for betting on which direction crypto will go.

These prediction markets might fall more in favor with those looking for a pure crypto play too. There are several decentralized prediction markets out there to choose from. Gnosis, for instance, is a platform for prediction market applications on the Ethereum blockchain. PlotX is a cross-chain prediction market protocol. This one makes it so users can make crypto price predictions in hourly, daily or weekly timeframes.

Then there’s Polymarket. This is an outlet for betting on a wide variety of hot topics. Want to make a wager that you know how long Vladimir Putin will stay in power? How about whether Jack Dorsey returning as CEO of Twitter (NYSE: TWTR)? The list of things you can bet on at the Polymarket website is a long one. And naturally, there are all sorts of crypto-related ones.

Here you can bet whether Celsius Network will announce its bankruptcy by July 13? Do you think Ethereum (ETH) will be above $1,200 on July 1? So far, the yes votes are winning. So a bet that it won’t could lead to a tidy payout.

So if you came here wondering how to short crypto, now you’ve got four easy ways to go about it. That being said, we do have some advice…

The Bottom Line on How to Short Crypto

Predicting which way the markets are going to go at any given time is nearly impossible. And that’s doubly true when it comes to cryptocurrencies. At least in the stock market investors have access to a wide array of fundamental information to make a more educated bet. But we don’t quite have the same thing when it comes to crypto.

Sure, we can read the whitepapers, look at trading volume and seemingly follow the influx or efflux of cash toward a given token. But shorting the crypto markets comes with a fair share of risk. The crypto markets are extremely volatile. Sudden increases in price can happen at a moment’s notice.

So just because you know how to short crypto, doesn’t necessarily mean you should. And even if you think you’ve got a hot tip that’s telling you which way crypto prices are going, remember, don’t bet more than you can comfortably lose. Short positions can cost investors a lot of money. They’ve even been responsible closing down some hedge funds. So be careful out there and good luck.

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6 Infrastructure ETFs to Watch in 2022

Infrastructure ETFs offer investors a diversified approach to this lucrative sector. Moreover, the infrastructure industry sits at the brink of global disruption. Investors can get in on companies making the changes that are shifting capital availability, changing environmental priorities and rapid urbanization. Moreover, this presents a unique opportunity for investors to get in early on disruptions in this sector.

List of 6 Infrastructure ETFs

• Global X U.S. Infrastructure Development ETF (BATS: PAVE)
• iShares Global Infrastructure ETF (Nasdaq: IGF)
• FlexShares STOXX Global Broad Infrastructure Index Fund (NYSE: NFRA)
• iShares U.S. Infrastructure ETF (BATS: IFRA)
• SPDR S&P Global Infrastructure ETF (NYSE: SSGA)
• Alerian Energy Infrastructure ETF (NYSE: ENFR)

Below, I’ll go over the highlights for these infrastructure funds below. This includes a description of each fund, the fund’s top holdings and investor returns.

Infrastructure ETFs to Buy in 2022

Global X U.S. Infrastructure Development ETF

Expense Ratio: 0.47%

Holdings: 98

The Global X US Infrastructure Development ETF offers exposure to domestic infrastructure development. The list includes companies with a focus on construction and engineering, raw materials, composites and transportation companies. It also includes companies with a heavy focus on construction equipment production and distribution. It seeks to track the S&P Global Infrastructure Index.

PAVE manages assets worth around $4 billion, making it the largest dedicated infrastructure ETF on Wall Street. Among its holdings are stocks that are publicly traded in the construction materials, heavy equipment, engineering and construction sectors.

The portfolio has a broad scope despite a targeted approach. Global X U.S. Infrastructure Development ETF has about 98 total positions. Some of the company’s top holdings include Nucor, Sempra Energy, Deere & Co., Fastenal and CSX. Moreover, this fund is highly diversified with no assets representing more than around 4% per holding.

Similar to the performance of the rest of Wall Street, the fund has lost about 20% this year so far.

iShares Global Infrastructure ETF

Expense Ratio: 0.43%

Holdings: 75 

The iShares Global Infrastructure ETF offers exposure to companies that provide transportation, communication, water and electricity services. It also seeks to track the S&P Global Infrastructure Index.

The index tracks the performance of the stocks of large infrastructure companies around the world. It contains companies in developed markets around the world. So, you should keep in mind that this fund is not exclusive to U.S.-based stocks. However, nearly 40% of this ETF contains U.S.-based companies. Moreover, some of the international companies in this ETF do business in the states. If you’re looking to invest in a domestic infrastructure ETF, check out the iShares U.S. Infrastructure ETF in the list below.

This fund currently has more than $3 billion in total assets. Its top holdings include Atlantia, Transurban, Enbridge, Aena and NextEra Energy. This fund is highly diversified, similar to the infrastructure ETF above. Its top holding carries 5% of the fund.

This infrastructure ETF is faring well despite ongoing market volatility. The fund is down around 3% so far in 2022.

FlexShares STOXX Global Broad Infrastructure Index Fund

Expense Ratio: 0.48%

Holdings: 220

FlexShares STOXX Global Broad Infrastructure Index Fund seeks to track STOXX Global Broad Infrastructure Index. The index reflects the performance of public infrastructure companies in the developed and emerging markets. It targets loosely-defined infrastructure sectors including energy, communications, utilities, transportation and government outsourcing.

This fund has around $2 billion in total assets. However, this fund is the largest infrastructure ETF in terms of holdings. The fund currently has around 220 holdings. Its top holdings consist of the Canadian National Railway, Canadian Pacific Railway, Verizon, Comcast and Enbridge. Similar to the ETFs above, this fund is highly diversified. Its top holding accounts for 5% of the entire fund.

This fund is in the red so far in 2022 with it being down 12%. However, it’s performing relatively well compared to the rest of the market. The fund’s stability is largely due to this fund’s diversification.

iShares U.S. Infrastructure ETF

Expense Ratio: 0.30%

Holdings: 163

The iShares U.S. Infrastructure ETF tracks the NYSE FactSet U.S. Infrastructure Index. It offers exposure to two groups of infrastructure companies: owners and operators, such as railroads and utilities, and enablers, such as materials and construction companies. So, investing in this fund can provide investors with access to infrastructure companies that may benefit from increased infrastructure activity in the United States.

This infrastructure ETF is smaller than the rest with assets reported around $1 billion. Despite this, this fund is one of the most diversified on this list. It has over 160 holdings in total. Furthermore, each stock in this fund accounts for less than about 1% of the portfolio. So, the wide diversification helps combat market volatility.

This infrastructure ETF is down nearly 13% in 2022. However, this fund is promising long-term with returns of nearly 30% in the last five years. So, this fund should pick up when the market cools down a bit.

SPDR S&P Global Infrastructure ETF

Expense Ratio: 0.40%

Holdings: 75

The SPDR S&P Global Infrastructure ETF seeks to track the performance of the S&P Global Infrastructure Index. The index comprises 75 of the largest publicly listed infrastructure companies.

The index has exposure to companies across transportation, utility and energy infrastructure sub-industries. Approximately 42% of its portfolio consists of industrials and 39% focuses on utilities. The remaining 20% consists of energy stocks.

This infrastructure fund’s top holdings include Atlantia, Transurban, Enbridge, Aena and NextEra Energy. Moreover, this fund is similar to the others with its diversification. The top holding in this fund carries around 5% weight in the fund.

This fund is holding up well with ongoing market volatility with -3% returns in 2022. So, this is one of the promising infrastructure ETFs as the market goes back to normal.

Alerian Energy Infrastructure ETF

Expense Ratio: 0.35%

Holdings: 33

The Alerian Energy Infrastructure ETF targets the Alerian Midstream Energy Select Index. This index includes companies operating in the midstream energy infrastructure sector in North America. It includes corporations and master limited partnerships (MLPs) dealing with pipeline transportation, rail and energy storage and processing.

Approximately 90% of the fund’s holdings are in companies involved in the gathering, processing and transportation of natural gas and petroleum. Its top holdings include Enbridge, Enterprise Products Partners, TC Energy, Energy Transfer and Cheniere Energy. This fund is less diversified than the others on this list with its top three holdings representing over 25% of the fund.

This ETF is in the green so far in 2022 with returns over 6% year-to-date. Moreover, with the rest of the market generally in the red, this presents a huge opportunity for investors looking to get in on diversified infrastructure stocks.

The Final Line on Infrastructure ETFs

Infrastructure ETFs offer investors a diversified, lower-risk approach to investing in this sector. Moreover, investing in disruptors of the industry can produce big returns for investors.

However, make sure to do your research before investing. Returns on investments are never guaranteed and there are always risks with investing. However, this is where doing a deep dive on a fund can make all the difference.

For other infrastructure investment opportunities, check out these infrastructure stocks. There are lots investment opportunities to consider today…

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