Fund holdings affect fund performance more than fees or past performance. A cheap fund is not necessarily a good fund. A fund that has done well in the past is not likely to do well in the future.
The word “index” in an ETF label does not always mean that investors are getting the specific exposure they seek. Diligence on ETF holdings is necessary despite what the providers might have you believe. Below I dispel the following myths concerning index ETFs.
At the outset of the second quarter of 2013, only a single sector earns an Attractive rating. My sector ratings are based on the aggregation of my fund ratings for every ETF and mutual fund in each sector.
At the outset of the fourth quarter of 2012, only a single sector earns an attractive rating. My sector ratings are based on the aggregation of my fund ratings for every ETF and mutual fund in each sector.
Here is a quick guide to the basics of the New Constructs website.
We recommend investors buy funds from the Consumer Staples and Information Technology sectors, though any sector can have Attractive-or- better-rated funds based on their holdings.
The Portfolio Management Rating of a fund is based on the aggregated ratings of the securities it holds as well as its overall Asset Allocation. When analyzing equity funds, we use New Constructs’ stock ratings, which are regularly featured as among the best by Barron’s over the past three years.