Portfolio Updates | WSBE 621

ETFs
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
This fund tracks the Dow Jones Global Select Dividend Index and seeks investments corresponding generally to the price and yield of this index. The fund will normally invest at least 90% of its net assets in the common stocks and depositary receipts that comprise the index. To be considered for the index, companies must meet several stringent criteria pertaining to dividend payments and other factors, such as trading volume. Shares returned 24.44% year-to-date and 72.39% on a one-year basis.

SPDR S&P 500 ETF Trust (SPY)
This is the original ETF, and is the largest, with $358.08B in assets under management. As the name tells you, it tracks the S&P 500 index of the largest U.S. stocks.

It’s a market-cap weighted index, meaning that familiar names like Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB) and Alphabet (GOOG) dominate the index’s performance. You’ll see the S&P 500 used as a proxy for broad-market performance in the U.S. Trade has been choppy in the month of May, but the fund has notched a one-month return of 0.58%.

Cohen & Steers REIT and Preferred Income Fund  (RNP)
Fund sponsor Cohen & Steers says the primary investment objective of this fund is to seek high current income through investment in real estate and diversified preferred securities.

In addition to holding REITs, the fund contains 43% fixed-income securities, in the form of preferred stocks from companies of all asset classes. Preferreds offer dividend payments, an advantage to investors if equity markets weaken, and if the REIT sector, in particular, tumbles.

In May, the fund pulled back to its 50-day moving average, finding support at that price line. It’s now consolidating below its May 5 high of $26.13. Watch for heavier upside volume as the stock rallies above that prior high.

Vanguard Dividend Appreciation Index Fund ETF Shares (VIG)
This fund gives investors a diversified portfolio of large-cap domestic dividend-paying stocks. Dividends help investors ride out market downturns; as stock prices decline, the fund owner will continue receiving dividends. This fund is another that’s been consolidating recently, along with the broader market.

It’s been finding good support above its 10-day moving average, although downside volume has been heavier than upside volume in the past few weeks.

Although the fund is immune from a sharp correction during a steep downturn, as we saw in 2020, it holds companies with strong balance sheets and cash positions. These companies often withstand a market downturn better than others.

Consumer Discretionary Select Sector SPDR Fund (XLY)
This fund tracks the consumer discretionary sector, which has pulled back recently, although it still sports a year-to-date gain of 6.04%. In the past month, it’s down 4.27%. This sector’s most heavily weighted holdings are Amazon (AMZN), Tesla (TSLA), Home Depot (HD), McDonald’s (MCD) and Nike (NKE).

Of those, Tesla, which was added to the S&P 500 and this sector in December, is the most volatile. Its year-to-date decline of 14.06%, along with Nike’s decline of 5.04%, is a drag on performance at the moment.

Clearly, consumer spending is rebounding fast as the U.S. and other parts of the world emerge from Covid restrictions. That bodes well for this fund, but headwinds such as higher labor and input costs could weigh down earnings.

Invesco Aerospace & Defense ETF (PPA)
The Invesco Aerospace Defense ETF is based on the SPADE Defense Index, which benchmarks the performance of companies in with defense, homeland security, and space industries.

The largest components are Raytheon Technologies (RTX), Lockheed Martin (LMT), Honeywell (HON), Boeing (BA) and Northrop Grumman (NOC), not exactly a collection of fast growers. On the other hand, these are stable due to long-term government and industrial contracts. The downside, of course, is the concentration of government business, should Congress decide to drastically reduce defense spending.  However, that does not seem likely at present. In fact, optimism about growth in the sector is high, with the fund trading 2.3% below its May 10 high of $76.67.

Mutual Funds

Artisan Mid Cap Fund Investor Class (ARTMX)
This fund pulled back again in May, retracing its April gains. It’s down 5.29 in May, but is still showing gains since the time it’s been added to the portfolio.

The barrier to entry here is low, with a minimum investment of $1,000, which is good news for individual investors. The management team seeks to identify companies with a strong competitive advantage. The most heavily weighted sector is technology, at 33.24%. That sector’s monthly decline contributes to the fund’s downturn in May. Mid-caps as an asset class are down slightly in May.

Fidelity Balanced Fund (FBALX)
In the most strict definition, a “balanced” fund adheres to a predetermined allocation. That’s true for this fund, whose stated neutral allocation is 60% stocks and 40% fixed income. However, managers have the latitude to allocate anywhere between 50% and 70% to equities, depending on market conditions.

Currently, the equity sleeve is hovering near 70%, a wise decision at a time when many fixed-income asset classes are struggling, relative to equities.

As is the case with many funds, the largest equity sector weighting is technology. Its recent decline is partly responsible for the fund’s one-month return of just 0.29%.

SELL Fidelity Select Industrials Portfolio (FCYIX)
This fund normally invests at least 80% of assets in securities of companies principally engaged in the research, development, manufacture, distribution, supply, or sale of industrial products, services, or equipment. We’ve held this for almost two months, and decided to sell, as it’s down somewhat recently, along with the broader industrials sector.

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