As markets remain volatile amid economic uncertainty, many investors are taking a long-term view and looking to exchange-traded funds (ETFs) to position their portfolios. CNBC Pro asked several finance experts for their top ETF picks to buy and hold this year. Vanguard Total World Stock ETF The Vanguard Total World Stock ETF (VT) should be the core holding for any long-term investor, according to Vahan Janjigian, chief investment officer at Greenwich Wealth Managemen t. “It is basically a world global index ETF that gives you tremendous diversification at a very low cost,” he said. “If you’re a relatively new investor in your 20s just getting started ⦠I think this is a great ETF to go into. You can hold it for the long term.” Janjigian, whose firm manages more than $2 billion in client assets, also suggested buying into the ETF through a dollar-cost averaging strategy. This means, for instance, investing every month rather than allocating a lump-sum one-off. “Put in the same amount of money every single month and forget about it.” Janjigian prefers the total world stock ETF over an S & P 500 fund to achieve a diversified portfolio, noting the S & P 500 is “very heavily weighted toward large-cap stocks”. The top 10 stocks in the U.S. benchmark comprise nearly a third of the index. “You’re not really that diversified because of the market cap weighting,” he added. VT 1Y line However, Ursula Marchioni, head of markets and portfolio solutions for Europe, the Middle East and Asia at BlackRock, believes broad global indexes are unlikely to rise in unison in the near term. Instead, she suggested a more fluid allocation approach would benefit investors. “Granularity is becoming increasingly important in this new investment regime â we don’t envisage a macro backdrop which is conducive to gains being made across all markets,” she said. Marchioni favors a “quality core” of investments through sectors like healthcare and technology, combined with cyclical exposure in financials and energy. Marchioni also added that she will likely revisit her allocation choices frequently, “especially in a year with increased geopolitical drivers.” SPDR MSCI USA Value ETF For investors concerned over the rising valuation multiples in tech and seeking a value tilt, Ian Rees, co-head of multi-manager funds at Premier Miton Investors , favors the SPDR MSCI USA Value ETF (UVAL-GB). “With high growth U.S. stocks, driven by the surge in technology and AI names, in the ascendancy, the value style of investing in this market has been out of favour for some years now,” Rees noted. However, “over the long term, following the value discipline of buying cheap companies has been proven to be an effective way of compounding wealth, although it struggles during market bubbles or narrow market leadership,” he added. Rees believes the current backdrop provides “an excellent entry point” into the value strategy. The MSCI USA Value index, accessible to U.S. and Europe-based investors, has run up 14% this year, outperforming the S & P 500. Investors in this ETF have typically made 7.8% in annual compounded gains over the past 5-years. Invesco Nasdaq Biotech ETF For investors wanting exposure to growth stocks, Rees likes the Invesco Nasdaq Biotech ET F (SBIO-GB) in the biotech space. “Biotechnology stocks have seen a sharp de-rating in the last few years, resulting in valuations looking quite low when judged in a historical context,” he said. However, the long-term trends of aging demographics and more personalized medicine are keeping the growth story intact, according to Rees. “This is creating a wave of investment opportunity which has generated a lot of positive comment from biotech managers,” he added. Invesco Nasdaq Biotech ETF, traded on U.S. and European exchanges, is down by 1.5% this month and is flat for the year. L & G Clean Water ETF Rees, whose firm manages more than $12.6 billion in assets, also highlighted the L & G Clean Water ETF (GLUG-GB) for investors keen on an environmental play. The ETF provides exposure to companies involved in clean water solutions amid growing global water scarcity concerns. “With many of the valuations within the index still broadly in-line with that of the World index, this is another growth area which does not require investors to pay nose-bleed valuations,” he said. The ETF, trading with the ticker GLUG on the London Stock Exchange, has gained nearly 3.5% this year. The fund’s $415 million is invested across 53 stocks in the Solactive Clean Water Index. Vanguard FTSE 250 ETF Finally, Rees sees an opportunity in the unfashionable U.K. market through the Vanguard FTSE 250 ETF (VMID-GB), which tracks mid-cap U.K. companies. “The perception of the U.K. being the sick economy of Europe drives a lot of negative sentiment, however the improving business confidence U.K. macro data of recent months showing the U.K. economy outperforming our European neighbors, is much overlooked,” Rees said. The $2 billion Vanguard ETF, also accessible to Germany-based investors (VMID-DE), is relatively flat for the year. It’s returned 3.45% annually over the past five years. However, it also distributes dividends with a yield of 3.3%. “While the U.K. market overall offers a lot of valuation appeal, of most attraction to us is the UK mid-market space covered by the FTSE 250 Index,” he added.
Source Agencies
