Three Funds For A Cautiously Optimistic Portfolio

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Three funds to consider for a cautiously optimistic portfolio: Cohen & Steers Infrastructure Fund, abrdn Healthcare Opportunities Fund, and Schwab US Dividend Equity ETF.Infrastructure companies ...

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John M Lund Photography IncIntroduction In my practice as a financial advisor, I get asked a lot of variations of the question, \"What fund should I buy if I'm scared of a correction?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0965509010.AUD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (AUDHDG) INC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","THQ":"Tekla Healthcare Opportunies Fund Shares of Beneficial Interest","LLY":"礼来","UTF":"Cohen & Steers Infrastructure","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0070302665.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) ACC","LU0672654240.SGD":"FTIF - Franklin US Opportunities A Acc SGD-H1","NEE":"新纪元能源","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","IE00BMG7P694.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis USD Plus","LU0985320562.USD":"NORDEA 1 GLOBAL STARS EQUITY \"BP\" (USD) ACC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","SO":"美国南方公司","LU0211327993.USD":"TEMPLETON GLOBAL EQUITY INCOME \"A\" (USD) ACC","LU0708995401.HKD":"FRANKLIN U.S. OPPORTUNITIES \"A\" (HKD) ACC","BK4516":"特朗普概念","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","LU2468319806.SGD":"MANULIFE GF HEALTHCARE \"AA\" (SGDHDG) ACC","BK4532":"文艺复兴科技持仓","BK4554":"元宇宙及AR概念","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU1978683503.SGD":"Blackrock Sustainable Energy A2 SGD-H","LU0965509101.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"A\" (SGDHDG) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","AMT.AU":"ALLEGRA MEDICAL TECHNOLOGIES","SG9999013999.USD":"UOB UNITED GLOBAL HEALTHCARE FUND (USDHDG) INC","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","LU0128525929.USD":"TEMPLETON GLOBAL \"A\" (USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4007":"制药","IE00B894F039.SGD":"Legg Mason ClearBridge - US Aggressive Growth A Acc SGD-H","SCHD":"Schwab US Dividend Equity ETF","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","LU0079474960.USD":"联博美国增长基金A","LU0266013472.USD":"AXA WF - Framlington Longevity Economy A Cap USD","BK4559":"巴菲特持仓","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","BK4081":"电力公用事业","AMT":"美国电塔","BK4550":"红杉资本持仓","FDN":"First Trust Dow Jones Internet I","BK4154":"管理型保健护理","UNH":"联合健康","MRK":"默沙东"},"translate_title":"谨慎乐观投资组合的三只基金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMT.AU":1,"UTF":1,"UNH":1,"THQ":1,"SO":1,"SCHD":1,"NEE":1,"MRK":1,"LLY":1,"AMT":1,"FDN":0.9},"content_text":"Three funds to consider for a cautiously optimistic portfolio: Cohen & Steers Infrastructure Fund, abrdn Healthcare Opportunities Fund, and Schwab US Dividend Equity ETF.Infrastructure companies provide stability and predictable dividends, while healthcare is essential and poised for growth.Schwab Dividend Equity ETF focuses on stable, dividend-growing companies and has performed well during draw-downs.   John M Lund Photography IncIntroduction In my practice as a financial advisor, I get asked a lot of variations of the question, \"What fund should I buy if I'm scared of a correction?\" This is a question I'm very familiar with. When greed is in the air, many people start to ask how to hedge their bets. They don't want to miss out on the next run-up, but they don't want to be all-in. To fit this role in a portfolio, of a \"cautiously optimistic\" holding, I see several funds as being good contenders, but here are the three I would be willing to bet my own money on:  Cohen & Steers Infrastructure Fund (UTF) abrdn Healthcare Opportunities Fund (THQ) Schwab US Dividend Equity ETF (SCHD)  Investing in Infrastructure My first pick is the Cohen & Steers Infrastructure Fund (UTF). This is a closed-end fund that holds a selection of global infrastructure stocks, including American Tower (AMT), Southern Company (SO), and NextEra Energy (NEE), the fund's top three holdings. Infrastructure companies typically provide the physical framework that society requires to function on a daily basis and are defined as utilities, pipelines, toll roads, airports, railroads, marine ports, telecommunications companies and other infrastructure companies. It has kept up with the S&P 500 since its inception, having cycles of outperformance and underperformance. Data by YChartsThe fund is notable for several reasons. The first is its distribution rate. It has a distribution rate of near 8% and a 5-year average of 7.65%, as noted by the garnet line below. It pays out monthly, and distributes $0.155/share. It has not changed its payment in the last five years. Data by YChartsThe fund is currently trading at a small premium. I would not recommend buying at a premium of 5% or above. The 5-year average is sitting at -0.25%, so there are definitely better opportunities for those willing to wait. Drawdowns typically accelerate and widen discounts, as noted with the steep 25% discount from 2020, so this is a fund to be added to as markets draw down. Data by YChartsInfrastructure companies are defensive in drawdowns because their business is often done on multi-year contracts, where their incomes are predictable and often backed by municipal bonds or state agencies. These companies also pay out predictable dividends, adding another layer of safety over other sectors that are more volatile and rely on price growth to drive investing returns. Data by YChartsLooking at the broader S&P utilities index, which infrastructure is a part of, we can see that it is currently far off its highs when compared to the S&P itself. This could be an opportunity for investors to get in before the sector reverts. Opportunities in Healthcare Enter our next contender, the abrdn Healthcare Opportunities Fund (THQ). This fund focuses on companies operating in the medicine and healthcare real estate spaces, like Eli Lily (LLY), UnitedHealth (UNH), and Merck (MRK), the fund's top three holdings. Data by YChartsWhile healthcare has been lagging the S&P 500, this is primarily due to the technology sector's meteoric rise. Healthcare is a sector that cannot be made redundant or unnecessary, and will constantly need more people working in it to keep up with aging populations. The number of workers fully insured for benefits (as measured by retirement benefits like Social Security/Medicare) is rising faster than the population, and has been for the last five years. Data by YChartsThis trend is likely to continue, and with a new wave of retirees coming off the pandemic, healthcare will be more important than ever. Data by YChartsThe fund itself pays out a 5-year average distribution of 6.97%, with a current yield close to 8%. The dividend was recently raised to $0.18/share, from a previous $0.11/share that it had been for quite a few years prior. Data by YChartsAs far as the premium is concerned, it rarely exists. Instead, it is common for the fund to experience a discount, with an average near 8%. Currently, the fund is trading slightly above its typical discount, an 8% discount is nothing to scoff at. Data by YChartsCongrats to anyone who was able to snatch up shares during the 16%+ discount late last year. Getting this fund at a 10%+ discount is a steal, and rarely happens. Dividends to the Rescue Last on this list is not a closed-end fund, but an ETF. The Schwab Dividend Equity ETF (SCHD) is a prolific fund that invests in companies committed to growing their dividends over time. True to its mission, SCHD's dividend has seen great appreciation since its inception. Data by YChartsSCHD is not a sector-specific fund like the other two, but instead invests across the US markets to select companies that have shown to provide the most stable, growing dividends. I summarized their methodology in an article I did on SCHD back in January.  According to Dow Jones, the publisher of SCHD's underlying index, the Dow Jones US Dividend 100 Index starts off with the broad US stock market, excluding REITs and stocks with market caps below $500M, and then screens out all stocks that do not have ten years of consecutive dividend payments. From there, stocks are weighted by their annualized 30-day yield (\"IAD Yield\") and 100 stocks are selected based on their \"relative strength\" ranking. Relative strength is defined by the following characteristics, by which constituent holdings are weighted:  Free cash flow to total debt. Companies with zero total debt are ranked first. Return on equity IAD yield Five-year dividend growth rate  Those four metrics are equally weighted to give each security a composite score, which determines its allocation in the index. No single stock allocation is allowed to exceed 4% of the index (excess above this will be sold during quarterly rebalancing events) and no sector can exceed 25%. Notably, if a stock reaches 4.8% of assets at the end of any trading day, SCHD will trigger an early rebalance to lower exposure to the offending stock.  This methodology has proven to work so far, and the fund has produced great returns over the last 12 years. Notably, the fund has raised its dividend every year since inception. Data by YChartsSCHD is considered defensive when compared to the S&P 500 more broadly because it is underweight volatile sectors like information technology and overweight less volatile sectors like financials and utilities. This shift has led to SCHD being kinder to investors during drawdowns. This is even more pronounced recently, with SCHD handling the Stagflation episode in 2022 better than the index. Data by YChartsConclusion When asked about what I would want to hold if I were optimistic of the markets, but cautious and wanting to reduce my risk, I answered with three funds that have caught my eye recently:  Cohen & Steers Infrastructure Fund (UTF) abrdn Healthcare Opportunities Fund (THQ) Schwab US Dividend Equity ETF (SCHD)  These funds offer exposure to sectors that are traditionally less volatile than the broad market, are concentrated on companies with unique characteristics that make them more resilient to economic downturns, and offer very large distributions that should keep investors afloat while share prices are depressed in a drawdown.  Thanks for reading.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2432308093"}