Using ETF’s as part of a portfolio

[James48843]

I haven’t used ETF’s myself for anything, but right now I’m looking at Vanguard
VGT (Vanguard Information Technology Index Fund ETF).

I think it has something like 380 companies, representing information technology- not just the Apple/ Nividia/ AI stocks, but a bigger slice. I think it looks like a nice way to hold some of the sector- without any particular technology suddenly losing value as new things are invented.

What do you think about using ETF’s instead of mutual funds, or individual stocks, for a similar portfolio diversity reason?

Is that a good strategy? Or do you think differently? I’m curious.

I just plunked some into VGT and hope to see a bright future. But I have no experience with long term holding ETF’s.

 

[tsptalk]

Check expense ratios, as they can vary greatly, but yeah, ETFs are easy to use and work fine.

Also, check to see if they pay dividends. Some do, some don't, and if they do, do you want them reinvested automatically, etc.?

As an example, I had owned BITO (a bitcoin ETF) that paid dividends. So, the price didn't do as well as bitcoin, but you received dividend payments in your account on a regular basis. I didn't want that so I went with IBIT.

 

[TommyIV]

I don't own any yet, but I've got my eye on SPYI (NEOS S&P 500 High Income ETF). It’s an interesting buy-and-hold alternative to simply tracking the S&P 500 through SPY. SPYI mirrors the S&P 500’s equity exposure but adds an income overlay by selling call options on the index. That option premium is distributed to shareholders, which is how the fund has produced an 11.6% dividend yield over the past 12 months at current prices. You’re still holding the largest companies in the U.S., but with meaningful monthly income on top.

The trade-off is that SPYI tends to lag the S&P 500 during strong bull runs because the call-writing strategy caps some upside. The advantage is that in periods of elevated volatility or sideways markets, the premium income can boost total returns relative to a plain index fund.

 

[tsptalk]

I'd be interested in hearing more about that strategy of selling calls.

 

[Zapple]

I haven’t used ETF’s myself for anything, but right now I’m looking at Vanguard
VGT (Vanguard Information Technology Index Fund ETF).

I think it has something like 380 companies, representing information technology- not just the Apple/ Nividia/ AI stocks, but a bigger slice. I think it looks like a nice way to hold some of the sector- without any particular technology suddenly losing value as new things are invented.

What do you think about using ETF’s instead of mutual funds, or individual stocks, for a similar portfolio diversity reason?

Is that a good strategy? Or do you think differently? I’m curious.

I just plunked some into VGT and hope to see a bright future. But I have no experience with long term holding ETF’s.

I love ETFs and own/have owned many through the years. It's a great way to invest into almost any market/sector. I have most heavily used the State Street SPDR sector ETFs, which are cap weighted to the respective market sectors. For example, XLK would be the IT equivalent to VGT. I use Schwab ETFs as well, among other companies depending on the investment (there are LOTS out there and it is wise to do your homework before buying). The bitcoin ETFs I have used are GBTC and BTC, but there are a host of other good ones out there, including other altcoins. ETFs are also quite tax efficent because they minimize capital gains distributions. So, they are excellent to use in a taxable account. Anyway, good luck!

 

[Jackbnimble]

I saved this from Twitter a few months back and noted the expenses for some Vanguard ETFs are cheaper (negligible) than the mutual fund equivalent. Might not be true now, but it is interesting. I own VTI & have owned VOO previously.