EFT Report asks Rita Cheng to share insights into the topic: “The Exchange Traded Fund I Always Own”
September 1, 2020 — In today’s issue of the EFT Report, reporter Lara Crigger writes, “ETF selection is a lot like going to your favorite res¬taurant. (Remember those?) There might be dozens of appetizing entrees on the menu, but most folks will usually just order the same thing, over and over. Why mess with what works, right? So it goes with constructing ETF portfolios. While there may be more than 2,300 ETFs currently on the market, most advisors typically come back again and again to at least some of the same names.”
Recently, she polled advisors about some of their favorite tried-and-true ETFs, including Marguerita Cheng, who chose: First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
Rita explains: [Our] clients may have “core” and “opportunity” portfolios. Other terminology might be “workhorse” versus “racehorse.” The “racehorse” portfolio can be more tactical, while the “workhorse” is more strategic, and the “racehorse” may be more volatile and have the opportunity to generate more alpha.
Some examples of “racehorse” ETFs I’ve used include cybersecurity, cloud computing and clean energy. I’ve used QCLN (First Trust NASDAQ Clean Edge Green Energy Index Fund); the First Trust EIP Carbon Impact ETF (ECLN) is another. We’ve used both. I certainly respect and honor the preferences of my clients. They drive hybrids and try to reduce their carbon footprint. They understand that green energy is a longer-term commitment. We don’t put all of their money there, though.
I love the racehorse/workhorse [analogy], because they are indeed different animals. This strategy allows clients to have their cake and eat it too. It can be vegan flourless chocolate cake. Now I’m hungry.