VCAR - Catchy and Profitable: 3 ETFs With Memorable Tickers and Stellar Performance
2023-06-22 07:55:13 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
One of the things I like to do from time to time in my InvestorPlace galleries is to have fun with my stock or ETF selection. Whether talking about an interesting company name or memorable ticker ETFs, it reminds me of the people who choose horses when betting at racetracks based on the jockey’s racing silks, etc.
In reality, some of the most profitable ETFs often intentionally have names or stock symbols that are memorable as part of their overall marketing plan to gather more assets.
For example, which of the following car-related ETFs would you easily remember? The First Trust S-Network Future Vehicles & Technology ETF (NASDAQ: CARZ ) or the Simplify Volt RoboCar Disruption and Tech ETF (NYSEARCA: VCAR )? My guess would be the former rather than the latter.
However, these funds haven’t gathered many assets, so they’re always at risk of being shuttered. To avoid that, I’ll select three top ETFs to invest in with memorable tickers that are also part of the 100 largest ETFs by assets.
iShares TIPS Bond ETF (TIP)
I thought finding catchy and memorable ETF tickers from the 100 largest ETFs by assets would be easier. Not so much.
First up is the iShares TIPS Bond ETF (NYSEARCA: TIP ). It is the 98th-largest by assets, with $21.6 billion . It tracks the performance of the ICE US Treasury Inflation Linked Bond Index , a collection of inflation-protected U.S. Treasury bonds, hence the symbol TIP.
TIP currently has 49 holdings generating a real yield (the yield after inflation taken into account) of 2.09%, a weighted average maturity of 7.3 years, and a weighted average coupon of 0.63.
Despite the weighted average maturity of 7.3 years, it holds Treasury bonds with maturities over 20 years (10.82% of the net assets), those coming due in the next 1-2 years (14.38%), and everything in between. However, most importantly, all the holdings have a AAA credit rating . You can’t get any better than that.
In existence since December 2003, the ETF has a low management expense ratio of 0.19%.
Vanguard Mortgage-Backed Securities ETF (VMBS)
The Vanguard Mortgage-Backed Securities ETF (NASDAQ: VMBS ) is the 93rd-largest ETF by assets, with $15.6 billion . Like TIP, it’s further down the list of the top 100 because of its fixed-income nature. Of the top 10 by assets, nine are equity ETFs.
VMBS tracks the performance of the Bloomberg U.S. MBS Float Adjusted Index .
It is a collection of “U.S. agency mortgage-backed pass-through securities issued by the Government National Mortgage Association ( GNMA ), the Federal National Mortgage Association ( FNMA ), and the Federal Home Loan Mortgage Corporation (FHLMC),” states the ETF’s summary prospectus.
Approximately 53.5% of the 1,078 bonds in the ETF have effective maturities between 5-10 years, 41.8% between 10 and 15 years, and the remaining 4.6% in bonds maturing between one and five years.
The average effective maturity of the holdings is 9.1 years, with an average coupon of 3.1% and an average yield to maturity of 4.5%.
Like TIP, VMBS is intended to protect your capital, not deliver home-run performance. However, since its inception in November 2009, it’s generated positive annual returns in 10 of 12 years if you exclude the 2022 bond meltdown. Furthermore, in the two down years, its losses were -1.29% (2021) and -1.26% (2013).
Charging just 0.04% or $4 per $10,000 invested, it’s a very inexpensive way to park some of your capital.
iShares Select Dividend ETF (DVY)
There is no more memorable ticker for the dividend category than iShares Select Dividend ETF (NASDAQ: DVY ). It doesn’t hurt that it’s also in the top 100 with $20.1 billion in net assets.
The ETF tracks the performance of the Dow Jones U.S. Select Dividend Index , a collection of 100 of the highest dividend-yielding stocks in the broader Dow Jones U.S. Index . Real estate investment trusts are excluded from selection.
To qualify, it needs to meet the following three criteria.
First, its current dividend per share (DPS) must be equal to or greater than its five-year average. Secondly, its dividend coverage ratio — defined as a company’s annual earnings per share divided by its DPS — must be 167% or greater. Lastly, it must have a three-month average daily volume of 200,000 shares, or 100,000 for existing holdings.
Launched in November 2003, its annualized total return through May 31 is 7.71%, 54 basis points lower than its benchmark. However, if you invested $10,000 at DVY’s inception, as of June 20, it was worth $44,820.
That’s better than a kick in the head, not to mention it’s five basis points better than the SPDR S&P 500 ETF Trust (NYSEARCA: SPY ) over the same period.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
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