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Hatch Weekly: It’s an ETF dance party and you’re invited

7 ETFs that will make you say WTF

Exchange-traded funds (ETFs) are an excellent option for investors who want instant diversification and want to expose their portfolios to an index, sectors, geographical markets, themes, or strategies. Other perks are that they’re cheap compared to managed funds and they offer quick liquidity if you ever need to sell faster than you first expected. Here are seven that we find particularly cool:


1. Vanguard S&P 500 ETF (VOO)

Oh look, it’s one of the largest fund managers in the world: Vanguard. Warren Buffett, goes further than just recommending VOO, he’s made it 90% of his estate plan for his wife should he pass. And why does the Oracle of Omaha love this fund so much? It’s the cheapest way to own the 500 largest companies in the world's biggest economy, the US of A. The Vanguard S&P 500 ETF tracks the S&P 500 and charges an expense ratio of just 0.04%. He explains his theory with this pearl:

“I believe the long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions, or individuals — who employ high-fee managers”

The S&P 500 returns about 10% per year over a long horizon. If you’re into long-term performance at low cost, you’re into this ETF.

2. iShares 7-10 Year Treasury Bond ETF (IEF)

The iShares 7-10 Year Treasury Bond ETF seeks to track the investment results of an index composed of US Treasury bonds with remaining maturities between seven and ten years. Investors are a savvy bunch, and when they see the returns of ‘safe’ assets (like bonds) improve, they are more likely to sell out of their positions in riskier ones, like shares. Good old US Treasuries offer investors a stable counter-balance to their equity positions.

3. iShares Russell 2000 ETF (IWM)

The Russell 2000 is an index that tracks 2,000 stocks with small market capitalisations (average market capitalisation for a company in the index is around $2.4 billion) and is another great way to track the US share markets, but with a focus on the smaller companies.

This ETF is a great way to participate in lots of ‘small’ US businesses all at once. The theory is small businesses have more opportunities to grow than bigger ones. The flip-side being the increased risk of failure that small businesses face compared to the established, household names that make up the S&P 500.

4. Schwab U.S. Dividend Equity ETF (SCHD)

Charles Schwab offers low-cost dividend-paying ETFs that are a great option for investors looking to turn their portfolios into cash flow. Focussing on large companies with stable dividends, this ETF is all about showing you that money. It’s passively managed to track the Dow Jones US Dividend 100 index, made up of 100 top dividend stocks. Investors use this strategy when they need their nest eggs to also support their day-to-day lifestyles.

5. SPDR Gold Trust (GLD)

If you want to invest in bling, AKA gold, without going into a store and buying bars of it, the Gold Trust ETF is a great option. GLD is a proxy for the price of gold bullion and charges a 0.40% expense ratio. You might not know that gold is often used as a hedge against declines in the share markets. Why? Well, as the economy falls, investors often turn to gold as an investment safety net which means gold can trade inversely to the popular funds we’ve just mentioned above - and could help further diversify your portfolio.

6. Invesco PowerShares QQQ (QQQ)

That’s a lot of Qs. This ETF tracks the NASDAQ 100 Index which happens to be made up of the 100 largest shares on the NASDAQ stock exchange, like your Googles and Apples and Facebooks and Amazons. This fund is limited to just the NASDAQ, so you buckle up and enjoy the ride as it’s pretty influenced by big news in the technology sector. Elon, we’re looking at you. This ETF charges a 0.20% expense ratio.

7. Vanguard FTSE Developed Markets (VEA)

Want to flavour that portfolio of yours with some international exposure? VEA is just one of many options available to you on Hatch. VEA follows the FTSE Developed All Cap excluding US Index, so it tracks companies of all sizes in developed countries – say hello to Canada, Europe, and developed Pacific nations for a low 0.05% expense ratio.

What is Hatch?

With Hatch, you can now buy and sell shares in over 2,900 companies & 500 exchange-traded funds, all listed on the US share markets. Invest dollar amounts to buy as much or as little of a company or ETF as you like, even if it’s a fraction of a share. Powered by Kiwi Wealth. See how it works

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Trade war, shmade war: the time is ripe to invest

President Trump's China trade dramabomb has caused yet another dip, so investors everywhere are asking whether or not this is a good time to invest. Let’s take a look at some options.

Time to buy or time to cry?

Fun fact: the best time to buy shares is when they’re down for reasons that don’t have anything to do with how the company is run, like a trade war or something. This doesn’t mean you should sell up your assets and put them in the markets, but you could make small investments with money you won't need soon. If the trade war is keeping you up at night, here’s a bit of relief: in 2018, the US economy produced over $20 trillion of goods and services. Trump’s tariffs on $200 billion of Chinese goods is only going to have a direct impact on 1% of the US economy. Sure, the economy might not grow as fast as it might have, on the upside a little less growth could help keep inflation low for longer.

Trade war investing 101

While the trade tensions have prompted many to reevaluate where they’re choosing to invest,Merril Lynch saw net inflows in nine out of the 11 sharemarket sectors - with tech, financials, health care and materials all experiencing near-record inflows. Targeting or avoiding the right industries can be really difficult during times of uncertainty, so it’s important to have a longer-term investment plan in place to weather the storm. If you’re just getting started with Hatch, you might want to consider looking into some of the ETFs we’ve just mentioned above. No pressure whatsoever, but if you’re waiting for the “perfect time” to invest, you’ll be waiting forever.Yes, the markets could dip further before a trade agreement is reached, but many manage this risk with a buy and hold mentality. Above all, we know that all it takes is another tweet to make this all go away.

Amazon deliver(oos)

Amazon (AMZN) is leading a new $575 million series G preferred shared funding round in the UK’s Deliveroo which means UberEats’ (UBER) biggest competitor has raised more than $1.5 billion to date. Amazon was once a competitor to Deliveroo – but Bezos knows that if you can’t beat’em, buy’em.

Heard of Amazon Restaurants? Us neither.

Amazon used to compete with Deliveroo and UberEats with its food delivery service called Amazon Restaurants. After four long years of trying to get it off the ground in the UK, Amazon Restaurants just couldn’t keep up with the two major players, so it folded in December. This $575 million investment round in Deliveroo shows that Amazon is still interested in the food delivery business.

Not for sale

Bezos has had the munchies for Deliveroo for a while – his company made two failed attempts to buy it outright. Deliveroo has plans to make these dollars work for them by investing in the engineering team, expanding delivery reach, and developing new products like its delivery-only kitchens. The company currently operates in 500 towns and cities in 14 countries, but with Bezos backing it, you’ll see it popping up everywhere and anywhere, no doubt.

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