Financial Well-being

The Roundhill Magnificent Seven ETF ( *MAGS* ) offers *equal weight* concentrated exposure to the “Magnificent Seven” stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.  It's P/E of 29.70 is very similar to broad technology sector, which is good. However, it's projected long-Term earnings growth rate is 10% *poorer* than it's technology index. Perhaps these are *too big* to coninue replicating such earnings growth forever. Even though it has produced oversized return during last 1 year, it's going forward return potential seems to be lesser than it's broad technology index. Also, being so concentrated is also prone to higher risk. iShares Russell Top 200 Growth ETF ( *IWY* ) might offer better diversification and higher earnings growth potential. We discussed it in past here:  https://financial-well-being.blogspot.com/2022/01/iShares-Russell-Top-200-Growth-ETF-IWY-Best-passive-index-ETF-for-large-cap-growth.html However, don't be surprised if,...

I recently added a bank loan bond fund called Janus Henderson AAA CLO ETF (JAAA) to my bond holdings. It's an ultra short duration corporate bond fund typically yielding equivalent to prime minus 1. These are bonds of mostly *AAA* rated leveraged buyout private equity companies who typically finance leveraged buyout by borrowing from banks. Banks then sell these to investors by securatizing them. These bonds are typically for 3-5 years maturity. However they are floating rate and so they are insensitive to interest rate changes. As private equity corporate bond fund, it's certainly riskier bond fund. However, none of AAA rated such loans defaulted during 2001 and 2008 mega crashes. So, I have decided to take my chances with it. It's Yield to Maturity is currently 7.03%. This is one of the highest yield for any ultra short investment grade corporate bond fund with low 0.22% expense ratio. It's not even sensitive to interest rate as coupon is adjustable rate. Updated on J...

Recently came across Fidelity Fundamental Large Cap Core ETF (*FFLC*) which has been very nicely outperforming it's large cap blend index. For example, it's annualized total return of 17% for last 3 years is just *double* of it's index.  Even though it's *actively* managed, it's expense ratio of 0.38% is as low as other inexpensive passive index funds.  It's P/E of 20 is 10% cheaper than it's underlying benchmark. Also, it's long term earning growth potential of 11% is 10% higher than it's benchmark. So, it has 10% more potential for total return alongside 10% discounted valuation. Best of both worlds. It's investment strategy involves investing primarily in equity securities. Identifying *early* signs of *long-term changes* in the marketplace and focusing on those companies that may benefit from *opportunities created by these changes* by examining technological advances, product innovation, economic plans, demographics, social attitudes, and ot...

PGIM Ultra Short Bond ETF (PULS) is a good low expense (0.15%) ultra short-term total bond fund ETF. It invests into investment grade (AA rated) corporate and government bonds with effective duration of 3 months. It offers 0.50-1% better return than AAA rated ultra short treasury bond ETFs such as SGOV. I believe such extra return might be worth, in spite of little bit lower rating. It's going forward yield to maturity is currently 6.04% Updated on Jan 12, 2025: PULS has continued outperforming it's underlying index 4 years in a row. It returned 6.12% last year (we discussed about it last year in Feb) as compared to ultrashort index's 4.39%. Hope it continues it's outperformance this year too.  This AA rated ultrashort (currently less than 1 month duration) Total bond fund ETF seems to be much better option than most of short term bank CD or high yielding savings account or most of money market funds. As Fed has cut interest rate few times last year, it's going forw...

Someone asked me if I know any good ETF for AI stocks. I did some digging and sharing my findings below: One can look into *Themes Generative Artificial Intelligence (WISE) ETF*. It's inexpensive passive index which invests into companies that have (or are expected to have) exposure to the provision of products and/or services that contribute to AI related industries.  As compared to broad technology index, WISE is 10% more expensive with P/E of 30. Perhaps one can try *slowly* building position in it by buying on dip during future downward cycles. For this index, companies are only eligible if they generate at least 50% of their revenues from activities which make use of technologies such as Artificial Intelligence (AI), Data Analytics and Big Data, Natural Language Processing and AI-driven services. Expect lots of volatility for this cutting edge technology sector. This is how it's last 6 months chart looks like: