How I’m Investing in a Post Pandemic World – #4

Dividend Geek • August 6, 2020 • 0 Comments

Continuing from the previous post (How I’m Investing in a Post Pandemic World #3) let’s check to see if my new investment strategy satisfies objectives #4 and #5:

#4 -High performance by taking advantage of future growth industries via concentration, but still provide diversification against business risk

From my research I selected two aggressive growth ETF’s: Wisdomtree Cloud Computing (WCLD) and the Investco NASDAQ 100 (QQQ). WCLD is my future tech growth fund and QQQ is a fund of established innovative companies. Both have excellent return histories that outperform the S&P 500.

WCLD – YTD 63.72% (this is a new fund that started on 9/6/2019)
QQQ – 3-Year Average = 23.83%, 5-Year Average = 17.61%, 10-Year Average = 18.53%

Here’s how that compares to the S&P 500 market index:
SPY – 3-Year Average = 16.18%, 5-Year Average = 12.37%, 10-Year Average = 10.37%

Within the technology sector I believe cloud computing is the next big wave of future tech growth. This fund is highly concentrated, but by owning a basket of 53 companies it lowers business risk through diversification; albeit, within a specific industry. Likewise the QQQ is the largest 100 established companies in the NASDAQ, while it has a concentration of innovative tech companies, there is also some diversification across multiple sectors. The top 5 sectors account for 94% of its weighting, as follows: (Source: Yahoo Finance):

Technology 45.07%
Communication Services 20.13%
Consumer Discretionary 16.89
Healthcare 7.61
Consumer Staples 4.75%

So 50% of my future portfolio is concentrated in future and current aggressive growth industries, and also diversified against business risk as the two ETF’s combined holdings are spread across 157 companies.

Objective #4 Check ✔

#5 – Provide dividend income and dividend growth

The second half of my portfolio is invested in two dividend ETF’s, SPDR Portfolio S&P 500 High Dividend (SPYD), which provides a high yield of dividend income (currently 6.06%) and some dividend growth with a 5.4% 3-Year dividend growth rate.

The second ETF Schwab U.S. Dividend Equity (SCHD), was selected primarily for its dividend growth (3-Yr 11.3%), but it also provides dividend income with a current yield of 3.31%.

Objective #5 Check ✔

Next up, I’ll go into greater detail into each of these ETF’s.