Exchange-traded funds, or ETFs, are a popular investment option that offer numerous benefits to investors. ETFs are collections of securities that trade on stock exchanges like individual stocks but track the performance of an underlying index, basket of securities, or commodity. They have lower fees, higher liquidity, and greater tax efficiency than most other types of funds.
However, with over 3,000 active U.S.-based ETFs to choose from, investors may feel overwhelmed by the variety and complexity of the market. Some ETFs cover the entire market or specific sectors, themes, or strategies.
Some investors may prefer exchange-traded funds that focus on traditional wealth-building strategies, like dividend growth or value investing. Others may opt for ETFs that employ more aggressive strategies, like covered calls.
Here’s the list of the funds that stood out from the crowd, along with a brief overview of their most important metrics.
Dividend growth
The WisdomTree U.S. Quality Dividend Growth Fund (DGRW -0.14%) focuses on dividend growth, rather than dividend yield. It tracks the WisdomTree U.S. Quality Dividend Growth index, which selects companies based on their earnings quality, return on equity, and expected dividend growth. The DGRW has a moderate expense ratio of 0.28% and an above-average yield of 1.84%.
Over the past five years, it handily outperformed the S&P 500 Dividend Aristocrats® index (the term Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC) by approximately 25%. Turning to the specifics, the DGRW’s total return on capital over this period was 105.8%, which was only 3% lower than the total returns of the benchmark S&P 500. This WisdomTree dividend growth ETF screens as a potent capital appreciation and income vehicle.
Monthly income
The JPMorgan Equity Premium Income ETF (JEPI -0.01%) employs a covered-call strategy to generate income from both dividends and option premiums. It invests in a…
Continue reading at FOOL.com
