Breaking News
Get 45% Off 0
💰 With a 129% YTD gain in the bag, these are our AI’s top global picks for March
Read now

3 Unique Large Cap ETFs For Long-Term Growth

By David FabianETFsMar 15, 2015 01:05AM ET
www.investing.com/analysis/3-unique-large-cap-etfs-for-long-term-growth-244995
3 Unique Large Cap ETFs For Long-Term Growth
By David Fabian   |  Mar 15, 2015 01:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
NDX
-2.79%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-1.78%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MSFT
-1.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DIS
-3.55%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SPY
-1.78%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
QQQ
-2.75%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

A significant cross section of the investment community has been conditioned to benchmark their large-cap ETF exposure against the SPDR S&P 500 ETF (ARCA:SPY). After all, this market bell weather is the largest ETF in the world and the most commonly referenced yardstick of equity returns.

While investing in SPY makes sense if you are looking to track the market cap weighted S&P 500 Index, there is an extensive universe of unique large-cap funds that deserve your attention as well. Many of these innovative ETFs offer a strong case for targeting a niche style or index methodology that may enhance your returns over the long run.

Vanguard Growth Index Fund (ARCA:VUG)

Growth stocks have significantly outperformed value names over the last 5 years, which is why VUG is one of the top performing large-cap ETFs in its class. This fund has $17.5 billion in total assets tracking 371 companies across a variety of sectors.

According to fund company data, VUG has gained 17.30% in average annualized return over the last half decade, while SPY has notched a 16.01% profit (though 2/28/15).

Because of its growth demographic, VUG has 44% of its portfolio exposure dedicated to technology and consumer services companies. Apple Inc (NASDAQ:AAPL) and Walt Disney Company (NYSE:DIS) are examples of these sectors represented in VUG’s top 10 holdings. Conversely, this ETF has very limited exposure to utility, telecommunication, and basic material stocks.

I currently own this ETF for clients of my Opportunistic Growth portfolio and consider it to be a core large-cap position. With a 0.09% expense ratio and diversified basket of holdings, VUG should be considered as a strong SPY alternative for your portfolio as well.

FirstTrust NQ-100 Equal Weighted (NASDAQ:QQEW)

According to ETF.com, the PowerShares QQQ (NASDAQ:QQQ) has been the strongest large-cap equity ETF over the last 5-years. However, one drawback to investing in the most well-known ETF tracking the NASDAQ-100 Index is the market-cap weighted structure. This index construction methodology allows for a very top heavy asset allocation directed towards AAPL and Microsoft Corp (NASDAQ:MSFT) as the two largest companies.

For more consistent overall diversification, I recommend investing in the large-cap technology growth theme through QQEW. This fund reconstitutes theNasdaq 100 Index into an equal weighted structure that allows for a level distribution of assets across all 100 stocks.

The unique organization in QQEW generated annualized market price returns of 18.65% over the last 5-years, which again beat the performance of SPY. This ETF has a higher expense ratio of 0.60%, yet still offers a compelling basket of high growth stocks to own in a bull market.

S&P 500 High Quality Portfolio (NYSE:SPHQ)

Looking for a way to cherry pick top quality stocks from the S&P 500 Index? SPHQ has done just that by identifying companies with the potential for long-term growth through stability of earnings and dividends. The end result is a diversified portfolio of 130 stalwart stocks identified by Standard & Poor’s that are rebalanced and evaluated quarterly.

The majority of the portfolio exposure in SPHQ is in the industrial and consumer sectors, which makes this fund unique from many of the technology-heavy offerings that dominate this category.

SPHQ has a net expense ratio of 0.29% and over $550 million in total assets. This ETF has gained 18.67% in annualized total return over the last 5-years as well.

The Bottom Line

Picking an ETF for core large-cap exposure can be daunting considering the number of available offerings and differing views on long-term value. Often times, pairing multiple funds is an attractive portfolio construction technique to diversify your risk or hone in on a specific theme outside of a traditional benchmark.

No matter what fund you choose, it’s important to consider a risk management plan that includes a stop loss or sell discipline to mitigate riding out a bear market.

Disclosure : FMD Capital Management, its executives, and/or its clients may hold positions in the ETFs, mutual funds or any investment asset mentioned in this article. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.

Original post

3 Unique Large Cap ETFs For Long-Term Growth
 

Related Articles

3 Unique Large Cap ETFs For Long-Term Growth

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Apple
Continue with Google
or
Sign up with Email