To The Moon

Choose $ARK Innovation ETF(ARKK)$or $SPDR Portfolio S&P 500 ETF(SPLG)$for you. Which ETF will you buy ? [Glance] 

@TigerStars

I am more of a moderate conservative investor now. My current portfolio is now about 80% ETFs and 20% Stock pick and Crypto.

There are many type of ETFs, mainly Diversified ETFs, Industry Specific ETFs and Exotic ETFs.

2 ETFs which is always in my mind. The ARKK and SPLG. Which I have invested in one.

Yes I do understand that these 2 ETFs are different in style and targeted market. So it could be a comparison of whether you like Apple or Orange.

ARKK (Ark Innovation)

Let’s first look into ARRK the ETF actively managed by Cathie Woods and team. There are 45 holdings (companies) in this ETF. The top 10 main holdings in this ETF are as following:

- TESLA

- Zoom

- Teledoc

- Roku

- Coinbase

- Spotify

- Unity Software

- Exact Science

- Twillio

- Block Inc

The 45 holdings are massively made up of disruptive tech companies focus on innovation. We can say this ETF is a bet on the future.

Many companies in this ETF are still with negative net income.

ARKK price have drop from $138.22 to $84.64 down by almost -40%. And with expense ration fee of 0.75%. It is a hard pill to swallow for investors who can’t stomach such volatility.

On a risk-management perspective, this is a very concentrated portfolios, often holding 40 to 50 stocks in mostly up-and-coming companies stocks for their growth potential. Investing heavily on companies stock’s with future return potential.

I am unsure of their fund strategies. It’s looks like their strategy are into buying into the “next-best ideas” companies with potential in future market capitalization.

Cathie’s style of investing are often into tech innovative companies that are often unprofitable, highly volatile, and could plummet, without much diversification in its portfolio. Where else other traditional ETFs which holds mega tech companies, as well as companies with exposure to variety of market segments, diversifying its risk exposure.

ARKK is more of a “go hard or go home” ETF. [Cool] 

It really takes a lot of conviction to hold onto ARKK as an investor.

I do understand what the companies in this ETF does and I do use some of the services n products of these companies.

But I see the ETF being too concentrated without much diversification. [Thinking] 

Will it be a good buy if this ETF goes down even further ?

For me I would only buy into it if it drop another -25% from its current value to $50-60

SPLG (SPDR Portfolio S&P 500 ETF)

Let’s look into SPLG. This ETF is passively managed by SPDR State Street Global Advisors.

SPDR is considered one of the biggest index fund issuer in the world. There are 500 holdings (companies) in this ETF. It is also known as the S&P 500. The top 10 main holdings in this ETF are as following:

- Apple

- Microsoft

- Amazon

- TESLA

- Alphabet (Google)

- NVIDIA

- Meta (Facebook)

- Berkshire Hathaway (Warren Buffet)

- JP Morgan

- United Health

The top holdings made up of Mega tech companies that have already disrupted traditional companies and now have a huge share of market capitalization. This ETF consist of 500 companies at 84% Large cap and 16% Mid cap companies in USA.

There are many companies in the top 10 here which I want to buy it’s shares but some of the value is so high. It is too much for me to buy it’s individual stocks. Hence it is good to buy it via a ETF like this.

It is considered well diversified. Many companies in this ETF are with huge positive net income and still have room for growth.

SPLG price raise consistently since it’s inception in 2005. It have a average yearly capital return of 20%-25%. With expense ration of only 0.03%. Base on its recent pass 1 year performance the price raise from $44.65 to $55.41 up by almost +25% within a year. This is pretty good and stable return of investment. [Strong] 

Why I like good diversified ETF it’s because if a few companies are not doing well within the ETF, the rest of the companies that is doing well can pull it (ETF) up. Or a certain industry not doing well, the rest of the industry can pull it up.

What not so good is too much diversification will make the ETF grow at a slower pace, but the trade off is it is less riskier yet still providing reasonably good returns. History have shown it actually out-perform almost all active fund mangers in the market long term, providing better returns.

And at reasonably affordable price of $55 per share now I am able to buy the shares for instance at slots of 5 shares every month to invest in it.

Well as I mentioned I am not all 100% into just S&P 500 ETFs. The allocation is ETF for 70-80% of my portfolio to hold long term. And I will still allocate 20-30% to stock pick on companies that i fancy and also into crypto currencies to buy and sell. Or even include ARKK into part of my 20-30%.

And not forgetting to have some reserved cash as “warchest” to buy more into good ETF or companies when the market crash. [Allin] 

I have learned a hard lesson on picking stocks myself and building my own portfolio on mainly stock picking individual companies. It is not easy, after studying the fundamentals (financials, potential..etc) of the company, the P/E ration …) I will still buy base on emotions. Usually incurring losses.

The fact is most of us are not full time traders, without much time to evaluate and study the companies. Without much insight info. Or it could even be having too much info on the internet, most of us do not know how to filter out the noises and not know how to focus on the fundamentals of the companies. It is not easy.

I am not really into options or margin now, not everyone able to do it. I know of many who suffer massive losses, trading in options and margin. But I am trying it out using the new simulated option trading in Tiger broker app soon to learn more.

Even those so called financial advisers, guru and qualified financial analyst, they are not even 50% accurate.

But through more experience i am sure we are all able to build a better portfolio ourselves, be it conservative or aggressive portfolio, depending on individuals appetite and willingness to risk.

For now my portfolio will be 70% on ETFs with VTI (Large,Mid,Small cap), SPLG (S&P 500), MCG (Mega Large cap) and XLV (Health Care).

Rest 15% are on stock picking and 15% cash reserved as “warchest” to buy more once the market goes down or crash … etc.

Start thinking of building a portfolio now. And share your portfolio and thoughts here for everyone of us to learn from each other in this journey. Good luck and to the Moon !! [Grin]