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.

The post 2 excellent ETFs to consider buying for an ISA in April appeared first on The Motley Fool UK.

In recent years however, there’s been a major shift in the way retail investors go about deploying their capital. Here’s a look at why this class of investors is smarter than many professionals used to think.

Buying the dip

In the last few major stock market meltdowns, retail investors have stepped in to buy shares at exactly the right time. For example, in early 2020 when stocks were tanking due to concerns over the impact of the coronavirus, retail investors stepped up to buy.

At the time, there was a notable surge in activity from these investors, with many ‘buying the dip’ (some research indicates it was retail investors who actually stabilised the market).

More recently, when stocks crashed in April this year due to tariff concerns, retail investors stepped up to buy again (while many institutions were offloading equities). In the US, retail investors made $4.7bn worth of net equity purchases when stocks tanked on 3 April – the highest daily inflow in the past decade.

Big gains

On both occasions, those who bought during the market weakness would have most likely have done very well. For example, let’s say that a UK investor had snapped up some shares in the iShares Nasdaq 100 UCITS ETF (LSE: CNDX) when share prices were down.

This is an ETF that tracks the tech-focused Nasdaq 100 index and offers exposure to Apple, Amazon, and Nvidia and many other well-known tech stocks. I see it as a good product to consider as a long-term core portfolio holding (despite the fact that it lacks sector diversification and is therefore more risky than some other index trackers).

In March 2020, this ETF was trading for under $400. Yet by late 2021, it was trading above $900 – more than 100% higher. Meanwhile, in April this year, the ETF was trading below $1,000. Today however, it’s sitting above $1,200 – more than 20% higher.

So there were big gains on offer for those who were willing to buy when there was fear in the air, as many retail investors did.

Why have retail investors got smarter?

Why have retail investors suddenly got much better at investing? Well, I think it comes down to information. In recent years, investing websites (like The Motley Fool), YouTube channels, and podcasts have democratised investing. Today, it’s really easy to learn the basics.

Through these kinds of resources, retail investors have learnt that the best time to buy stocks is when there’s panic in the air. They’ve also learnt about other key concepts such as portfolio diversification and the importance of investing for the long term.

It’s great to see. Because when it’s done properly, investing in the stock market can be a great way to build wealth for the future.

The post Retail stock market investors are no longer the ‘dumb money’ appeared first on The Motley Fool UK.

Here are three top funds I’ll buy for my ISA when I next have spare cash to invest.

Value

Full disclosure. I opened a position in my first fund, the Xtrackers MSCI World Value ETF (LSE:XDEV), over the summer. I’m looking to increase my stake even further.

The fund’s delivered an average yearly return of 6% since it began a decade ago. This is a decent figure, although I think it could deliver a better return looking ahead given that demand for value stocks is gaining momentum.

In total, Xtrackers ETF is invested in 400 large- and mid-cap companies based on a variety of classic value metrics. These include forward price-to-earnings (P/E) and price-to-book (P/B) ratios. Major holdings here include tech shares Cisco, IBM and Intel.

Around 40% of the fund’s tied up in US equities, which leaves it vulnerable to a potential Stateside recession. But exposure to other territories like Japan and the UK helps to reduce this danger.

Growth

Since its creation in 2010, the iShares NASDAQ 100 ETF (LSE:CNDX) has produced a tasty 18.5% average annual return. That’s better than what the S&P 500 and FTSE 100 have both delivered in that time.

The fund’s star performance reflects its high exposure to fast-growth tech shares. Computer hardware and software, telecommunications, and e-commerce shares have risen sharply in value as our lives have been increasingly digitalised.

There seems to be a lot more scope for growth too, thanks to phenomena like artificial intelligence (AI), autonomous driving and quantum computing. This iShares fund has holdings in major players in these fields including Apple, Nvidia and Microsoft.

I am concerned about ETF’s high valuation however. A meaty P/E ratio of 37.8 times leaves it vulnerable to a price correction if market confidence sours. That said, I still believe the potential long-term benefits still makes it worth a very close look.

Dividends

The SPDR S&P Euro Dividend Aristocrats ETF‘s (LSE:EUDV) designed for those seeking reliable and growing dividends over time. And today, its dividend yield’s 3.5%, which is broadly in line with the FTSE 100 average.

This fund focuses on high-yield European companies that’ve raised or held payouts for 10 successive years or more. Through a combination of steady passive income and share price gains, it’s delivered a solid average annual return of 8.1% since its inception in 2012.

In total, this SPDR fund holds 39 different stocks, of which its largest holdings are financial services providers Ageas, Generali and Allianz. However, a large exposure to defensive industries like utilities and consumer staples helps it deliver decent returns even during economic downturns.

I think it’s a great fund to consider, even if its denomination in euros leaves my returns vulnerable to exchange rate movements versus the pound.

The post Value, growth and dividends! 3 ETFs I’d buy in a Stocks and Shares ISA appeared first on The Motley Fool UK.

It can pay to look at other ETFs though. Here’s a product that’s delivered far higher returns than FTSE 100 tracker funds over the last decade.

Incredible long-term returns

The product in focus today is the iShares NASDAQ 100 UCITS ETF (LSE: CNDX). This is an ETF that tracks the tech-focused Nasdaq 100 index.

Over the 10-year period to the end of July, this fund returned 424.52% (in US dollar terms). That compares to a return of 80.65% (in GBP terms) for the iShares Core FTSE 100 UCITS ETF (Acc), which tracks the FTSE 100 index and includes all dividends.

It means that, ignoring currency movements, the Nasdaq 100 ETF generated roughly 5.3 times the return from the FTSE 100 ETF.

When currency movements (the weak pound) are factored in, it delivered around seven times the return of the Footsie product (ie this is the return UK investors would have got).

Note that I’m ignoring all trading commissions and platform fees here.

The world’s best tech companies

How has this index managed to generate such spectacular returns? Well, it comes down to the fact that the Nasdaq 100 is home to dominant tech companies like Apple, Microsoft, Amazon, and Nvidia, which are all growing rapidly as the world becomes more digital.

Source: iShares

The FTSE 100, by contrast, is home to a lot of lower-growth businesses such as BP, Shell, Unilever, and British American Tobacco. And some of these are facing structural challenges (ie the shift to renewable energy for the oil majors).

Expect volatility with this ETF

Now, I don’t own the iShares NASDAQ 100 UCITS ETF. That’s because I own shares in a lot of the top holdings directly (I’ve large positions in Apple, Microsoft, Nvidia, Amazon, and Alphabet).

And this has worked well for me. I’m up 502% with Nvidia, for example.

But if I was looking to build a well diversified long-term portfolio from scratch today, I’d definitely consider this ETF.

It’s not a product I’d go ‘all in’ on. This is due to the fact that the Nasdaq 100 (and the underlying technology stocks) can be very volatile at times. In 2022, for instance, this ETF fell a whopping 32.7% (in US dollar terms), versus a return of +4.6% (in GBP terms) for the FTSE 100 product. That’s a nasty fall.

But I think it could play a valuable role as part of a diversified portfolio. For example, if I had a global equity tracker fund such as the iShares Core MSCI World UCITS ETF as a core holding, this could be a nice addition for a bit of extra zip.

I’d expect this part of my portfolio to be volatile. But in the long run, I think it should do well for me. After all, the world’s only going to become more digital in the years ahead.

The post Over the last 10 years, this ETF’s generated around 7 times the return of the FTSE 100! appeared first on The Motley Fool UK.

Achieving better returns than the S&P 500 index, by comparison, has been much more of a challenge, thanks to the tech sector boom.

Yet several UK-listed exchange-traded funds (ETFs) have managed to trump even the S&P. Let’s take a close look at one of my favourites, and explain why it could be a brilliant buy.

The outperformer

The ETF in question is the iShares NASDAQ 100 UCITS ETF (LSE:CNDX). This fund invests in scores of non-financial Nasdaq-listed companies (101 as of today, in fact). And so it gives targeted exposure to the booming US tech sector.

In the 12 months to July, the fund delivered an enormous total return of 23.37%. This beat the 21.81% return that the S&P-tracking iShares Core S&P 500 UCITS ETF delivered over the period. And it’s significantly above the iShares Core FTSE 100 UCITS ETF GBP (Acc)‘s 12.81% total return.

The Nasdaq-focused ETF’s performance is even more impressive over a long time horizon too.

Between August 2014 and July 2024, it delivered a total average annualised return of 18.03%. That compares favourably with the 12.78% from iShares’ S&P 500 fund, and the 6.09% return from that other Footsie fund.

Growth levers

So why has the fund performed so strongly? While volatile at times — it delivered a negative return of 32.7% in 2022 — its success reflects how our everyday lives have (and continue to) become increasingly digitalised.

More than 50% of the fund is tied up in information technology goliaths such as Apple, Microsoft and Nvidia. A further 16% or so is invested in communication companies such as Alphabet, Meta and T Mobile. Around 12% is dedicated to consumer discretionary businesses such as Tesla and Amazon.

More specifically, the fund has enabled investors to capitalise on multiple booming tech segments like artificial intelligence (AI), cybersecurity, quantum computing and green technology.

So what next?

A bright outlook for these sectors means the fund could well sustain its outperformance over the long term. Take the AI segment as an example.

Analysts at Statista reckon this will grow 290% worldwide between 2023 and 2028 to be worth a colossal $529bn. We’re merely scratching the surface of AI’s potential capabilities right now, and growth in the coming decades could be beyond our wildest expectations.

But as with any investment, there are risks to building a position in the iShares NASDAQ 100 UCITS ETF. One concern I have is that it carries an expensive price-to-earnings (P/E) ratio of 35.4 times. Such a hefty valuation could prompt a sharp price correction if concerns over Big Tech’s long-term profitability grow.

Having said that, I think the fund could be a good investment to consider as part of a well-diversified investment portfolio. If I didn’t already have tech exposure through the iShares S&P 500 Information Technology Sector UCITS ETF, I’d consider buying this fund for my own portfolio.

The post This ETF’s beaten the FTSE 100 AND the S&P 500 in the past 10 years! appeared first on The Motley Fool UK.