Some of the savviest investments I’ve made have been exchange-traded funds (ETFs). Through these it’s possible to quickly invest in a basket of stocks or a particular sector that looks oversold.
For example, let’s say semiconductors sell off heavily. There are ETFs for that. European banks suddenly look cheap? Ditto. Today, there’s usually an ETF to capitalise on every theme imaginable.
With this in mind, here are two falling ETFs worth checking out in April.
Tech stock correction
The iShares NASDAQ 100 ETF (LSE:CNDX) tracks the performance of the Nasdaq-100 Index, which is the 100 largest non-financial companies listed on the Nasdaq exchange.
So we’re talking the Magnificent Seven tech stocks, as well as blue-chips such as Walmart, Costco, Broadcom, Netflix, Marriott International, and PepsiCo.
After notching up another record high in October, the Nasdaq 100 recently fell 12%, officially entering correction territory. The selling has eased in recent days, but could worsen if the war in Iran lasts longer than expected. Rising interest rates are a risk to the stock market.
Looking ahead to the next decade however, the tech revolution is only going to accelerate. Whether it’s AI agents, robotaxis, quantum computing, cybersecurity, or the booming space economy, this index is bursting at the seams with disruptors and tech innovators.
Plus, the Nasdaq’s changing the rules to allow new mega-cap companies like SpaceX to rapidly enter its main index. So investors also get exposure to potential future growth stars that haven’t yet listed.
Of course, history’s no reliable indicator of the future. But it’s worth pointing out that the Nasdaq 100 has experienced over a dozen corrections and a handful of bear markets in the past two decades. And investors have done very well holding through thick and thin (and buying on noteworthy pullbacks, like today).
For me, there are just too many high-quality companies in this index for it not perform well over the long term. And this makes the ETF, which also reinvests company dividends back into the fund, worth considering on the dip.
High-yield UK dividends
Changing gears, the second fund to look at is iShares UK Dividend ETF (LSE:IUKD). This one holds 50 UK stocks with high dividend yields, excluding investment trusts.
The five largest holdings today are BP, Legal & General (carrying an 8.8% yield!), British American Tobacco, NatWest, and HSBC. From the FTSE 250, the largest are Aberdeen, Investec, ITV, Unite, and Tritax Big Box.
Many of these have also sold off recently due to inflation fears. This adds UK economic risk moving forward, as the ETF is tilted towards financials.
Reflecting this, the ETF’s down 7.5% since the end of February.
However, this means it’s now yielding 4.83%, which is pretty decent and well above a standard FTSE 100 tracker (around 3.14%).
The ETF’s also trading cheaply, with a fund-level price-to-earnings multiple of just 13.8. Add in that almost-5% yield and I think there’s a good case to consider buying this ETF right now.
Finally, it’s worth mentioning that the total expense ratio here is just 0.4%. So the iShares UK Dividend ETF offers a cheap way to invest in a diversified income portfolio.
