However, often times market participants have a few core holdings either through ETFs or single stocks, utilizing other smaller holdings to ‘fill in the cracks’. These smaller holdings, if performing well, could slowly start to take over a portfolio offering outsized returns, but they need to be chosen well and offer high quality. In accordance with this paradigm, Morningstar, an American financial services firm, offered three great ETFs that can play a supporting role in a portfolio, which Finbold has analyzed in detail.
Avantis US Small Cap Value ETF (NYSEARCA: AVUV)
AVUV is an actively-managed US small-cap ETF focusing on creating an index-like diversification, with investments in hundreds of securities and exposure to the most relevant industry segments. Further, the fund’s concentration is on the lower side as the top ten holdings account for less than 10% of its value. Year-to-date (YTD), the fund is down 10.46%, and in the last month, AVUV has been trading in the $70.49 to $79.19 range. Technical analysis indicates a support line at $68.86 and a resistance line at $72.94.
SPDR S&P Dividend ETF (NYSEARCA: SDY)
SDY focuses on the stock universe from the S&P 1500 index, choosing those stocks that have paid dividends for at least 20 consecutive years. Such an approach often guarantees high-value companies for the ETF. YTD, SDY is down 5.81% while trading between $119.39 and $129.89, with a support line at $114.07 and a resistance zone ranging from $121.65 to $126.45.
iShares Core MSCI Emerging Markets ETF (NYSEARCA: IEMG)
IEMG focuses on all stocks of all sizes from 24 emerging markets and weights the portfolio by market capitalization. Such an approach allows to channel the market consensus on stocks and keeps turnover low. Investors should keep in mind that emerging markets often come with more political risks. Emerging markets did not do too well in 2022, as the ETF is down 22.49% YTD. Over the past month, it traded from $46.15 to $50.34, with a support line at $46.52 and a resistance zone ranging from $47.38 to $48.61. All in all, having supporting stocks or ETFs to fill in the void left by the lackluster performance of high-flying growth stocks could benefit any portfolio. The above three picks offer solid diversification and an opportunity to invest in parts of the markets sometimes neglected by market participants. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
