Funds & ETFs 828

These funds provide exposure to large caps, biotech, and capital and income pools.

Invesco QQQ Trust (QQQ) | Daily Alert April 14

Invesco QQQ Trust based on the Nasdaq-100 Index, which encompasses 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on
market capitalization. Both the fund and index are rebalanced quarterly and reconstituted annually. Reconstitution involves revising the list of constituent stocks.

Worth noting—the fund is the sixth most actively traded US ETF, and is the fifth largest ETF in terms of assets, according to The fund and index’s emphasis on the largest stocks and elimination of financial firms results in a technology heavy portfolio—about 47% of assets. Hence, large-cap technology stocks’ performance plays a big part in this fund’s performance.

The fund is also concentrated when looking at individual holdings. Microsoft accounts for almost 12% of assets, and the top ten stocks (four in the Information Technology sector and four in Communications) account for just shy of 54% of assets.

The average market cap for the fund’s holdings is more than $500 billion. To give you a point of reference, small cap stocks are considered to be under $3.5 billion; mid-cap $3.5b–$9.0b; and large-cap above $9 billion. In addition, the fund maintains a low expense ratio. The gross expenses for the Trust for 2019 were 0.20% of the Net Asset Value, and the fund has committed to cap the annual expenses at that level.

This ETF consistently outperforms the Russell 1000. It has finished in the top quartile of funds in its category nine of the last 10 years. In addition, it has also outperformed the broad stock market (as measured by the Vanguard 500 Index Fund) for nine of the last 10 years.

QQQ is currently ranked #1 in our Domestic Stock Fund list. It is a steady long-term performer and would serve as an excellent core holding for any long-term portfolio.

Brian W. Kelly, Moneyletter,, 800-890-9670, April 2020


Virtus LifeSci Biotech Products ETF (BBP) | Daily Alert April 2

Biotechnology has become a major industry and the source of the world’s top breakthrough drugs. Biotech companies offer the most explosive profits in the healthcare industry. However, stocks of individual biotech companies are often volatile. Diversification is essential and can be accomplished by investing in a diversified biotech electronically traded fund (ETF) investing exclusively in a portfolio of biotech companies.

Virtus LifeSci Biotech Products is a passively managed biotech ETF that weighs the portfolio selections essentially equally, as opposed to weighing selections according to market capitalization.

This is an important aspect because biotech ETFs weighing their portfolio selections essentially equally have been the best performers by far because they have larger investments in smaller biotechnology companies which are acquisition targets for large pharmaceutical companies looking for ways to revitalize their drug portfolios by scooping up smaller companies.

Gray Cardiff, Sound Advice,, March 2020


*Fidelity Capital & Income Fund (FAGIX)

If you’re in a position to put cash to work, but questioning whether you want to bear the full risk of the stock market at a time of high uncertainty, high-yield bonds offer a nice compromise with several potential advantages:

Lower risk. Fidelity Capital & Income has a volatility score of 0.72. In effect, it behaves like a low-risk stock fund.

An income stream that reinvests in additional shares monthly. The fund yields more than 5%, meaning over the next 12 months it could benefit from both a robust income stream and share price gains.

Little or no interest-rate risk. Because credit-risk is the driving concern for high-yield bonds, especially now, they act more like stocks than bonds.

Less risk of downgrades. Today it’s only a slight exaggeration to say there are two types of corporate bonds: high-yield, and bonds that may soon be downgraded to high-yield. Better to own the debt that already reflects reality.

If you take the plunge, aim for an investment horizon of at least three years (ideally five). In the past, this fund has usually recovered its losses within 12 months, but they often outperform for even longer.

Jack Bowers, John M. Boyd and John Bonnanzio, Fidelity Monitor & Insight,, 800-397-3094, April 2020


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