Now more than ever, it’s important to focus on stocks with strong financials and fundamentals. Simply chasing the latest trends and the hottest stocks could set you up for disappointment later on, particularly if it results in you investing in stocks at enormous and unsustainable valuations.
An exchange-traded fund (ETF) that focuses on quality that can be a great option for long-term investors today is the JPMorgan U.S. Quality Factor ETF (NYSE Arca:JQUA). It selects and weighs stocks based on criteria related to quality and profitability, in an effort to keep risk low for investors.
Its expense ratio is 0.12% which doesn’t make it the cheapest ETF, but it’s still fairly low in terms of fees, especially given that it isn’t just giving you exposure to a broad subset of the market. Instead, it’s applying methodology that will ensure you have a good mix of quality stocks.
As of Sept. 4, there were 274 holdings in the ETF, with the largest stocks accounting for less than 3% of the portfolio individually. Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Broadcom (NASDAQ:AVGO), and Apple (NASDAQ:AAPL) are the fund’s three largest holdings and together, they account for only 7.2% of its total net assets. That’s some good diversification that ensures you aren’t heavily exposed and vulnerable to any single investment.
The ETF yields around 1.2% and this year, it has risen by 8% in value. Over the past five years, it has generated returns of close to 90%, and that’s without including dividends.
If you’re a risk-averse investor looking for access to quality stocks with great diversification, the JPMorgan U.S. Quality Factor ETF is a fund worth considering for your portfolio.
