You can now supplement your existing investment portfolios with ETFs.
We are now offering Exchange Traded Funds (ETFs) to our clients at Elementus Wealth!
What’s an ETF?
Similar to mutual funds, Exchange Trade Funds (ETFs) allow investors to buy a stock portfolio without buying each stock one at a time. The result is lower costs, greater diversification, tax efficiencies, and more flexible trading.
How do ETFs differ from private pools?
Private pools and ETFs share many commonalities, such as they both invest in a mix of assets to achieve diversification for the investor.
The critical difference between ETFs and private pools is the way they are managed. ETFs mimic a market index which means they are usually passively managed. Private pools are actively managed by a team of specialist managers who oversee the investment activities in the portfolio.
More differences between ETFs and Private Pools:
- ETFs are traded on a stock exchange, which means the price of an ETF is constantly changing. Similar to how a stock’s price changes on the New York Stock Exchange, mutual fund prices only change at the end of the day.
- Private pools tend to have higher investment management fees than ETFs because they require a lot more work, time, and research. However, they are still lower than your traditional mutual funds.
- ETFs often mimic a stock market index like the S&P 500 (the U.S.’ 500 largest companies). By investing in an index, your investment returns match closely to the performance of the index. Private pools, on the other hand, will try to beat the index.
A Combined Strength for Your Core Equity Portfolio
At Elementus, we see benefits in both active and passive management. We use index ETF to lower your investment costs. Additionally, we take advantage of actively managed private pools to enhance your portfolio returns.
70-80% of your core portfolio will be a combination of private pools and/or an ETF that tracks a global market index. This would provide a solid anchor for your portfolio, diversified across industries and geographical areas, and will be able to withstand short-term volatility.
Emerging Investment Theme – A.I. & Robotics
The pandemic has accelerated a variety of secular trends: e-commerce, digital payments, and remote working. While mega-cap tech has already benefited from the acceleration, we see long-term opportunities for many smaller and mid-cap technology companies, especially in Robotics and Automation.
We believe that Robotics and A.I. can disrupt a broad range of sectors. In particular, manufacturing, military and defense, medicine, transportation, and agriculture. Structural trends such as demographic changes, rising labour costs in emerging markets, drive for efficient productivity, and increasing digitalization will support this investment theme.
Emerging Investment Theme – Green Energy
2020 was an important year for global climate policy. The E.U., Japan, and China issued carbon neutrality pledges. In 2021, the U.S. re-joined the Paris Agreement. President Joe Biden has outlined a $1 trillion infrastructure bill that focuses on sustainable infrastructure and equitable clean energy.
After a record-breaking 2020 market outperformance, we have questioned whether renewable energy will continue to perform. Nevertheless, we continue to expect selective parts of the sustainable infrastructure and green energy universe to experience substantial revenue and profit growth in the years ahead. Thus, there is long-term support for this investment theme as well.
Emerging Investment Theme – Web 3.0
The development in mobile technology, social media networks, and cloud databases has been what has driven technology growth in the past decade. Looking further into the future, we see a world run on new types of innovations. Such as blockchain-based technologies (cryptocurrencies, metaverse, NFTs), virtual reality, augmented reality technologies. Although we cannot predict when we would see a fully matured Web 3.0 world, we see investment opportunities for the long term in this area.
Talk to our team to learn more about ETFs!
If you would like to learn more about ETFs, please feel free to email our Investment Advisor, Mac (mac@elementuswealth.com).
