Investing in US stocks has fared better than expected this earnings season, with the S&P 500 up 9% in July. And if that has inspired you to invest in stocks again, you might want to start by seeing where some of the world's biggest investors are investing...
Investing in defensive stocks ️
From G-Squared Private Wealth We are advised to take a conservative approach to our investment in US stocks. The company considers the US market to be high risk and currently offers low returns. They suggest we make our investment in US large cap stocks, focusing on defensive sectors and "quality" companies, that is, those with a history of consistent profit growth. They also recommend that we keep the money not invested in short-term US government bonds, instead of having it in cash.
How do we position ourselves?
Healthcare and consumer staples are key defensive sectors, where we can gain exposure with the fund Healthcare SPDR (XLV) and the background SPDR of the consumer staples sector (XLP). The bottom Invesco S&P High Dividend Low Volatility ETF (SPHD) and background First Trust Morningstar Dividend Leaders Index (FDL) offer high quality, low volatility exposure to large US companies, while the Invesco S&P 500 Quality ETF (SPHQ) includes the 100 highest quality US stocks based on metrics such as return on equity and financial leverage.
Investment in private stocks
This idea that we show you below (which comes from Unique Wealth) seeks to capitalize on the dynamics of private companies. Private equity firms could be a good investment. About 95% of US companies are private. This fact leads us to be leaving behind many opportunities if we only focus on those that are listed on the stock market. And since investing in private stocks has historically had a very low correlation with public markets, private companies can offer diversification advantages to our portfolios.
How do we position ourselves?
To gain exposure to investing in private stocks, we can make our investment in stocks of giants like Blackstone (BX), Carlyle (CGBD) and KKR. But diversification will spread risk across the sector, and we can do exactly that using exchange-traded funds like the iShares Listed Private Equity UCITS ETF (IPRV) and anyone who follows the index Refinitiv Private Equity Buyout, which replicates the returns of mutual fund portfolios by investing in a similar combination of listed stocks.
Cybersecurity
Security has gone beyond traditional military and defense spending. Today it includes food, energy and cybersecurity. As an example, the disruption of grain exports from Ukraine has highlighted the importance of having agricultural production from other sources. Automation and advanced seed technology can be of great help in achieving that goal. This could be why UBS thinks cybersecurity is a great investment after the Russian invasion.
How do we position ourselves?
The cybersecurity industry is quite fragmented, so it can be difficult to pick individual winners. We can take a look at two of the largest cybersecurity ETFs, such as ETFMG Premium Cyber Security ETF (HACK) and the First Trust Nasdaq Cybersecurity ETF (CIBR).
Natural gas
The Ukraine conflict has revealed Europe's dependence on russian energy. This development may accelerate the shift away from fossil fuels around the world, benefiting green technology and energy efficiency companies. But for now, expect more spending on traditional fossil fuels. And although the oil majors are clear beneficiaries of this, UBS has pointed out that so are the exporters of liquefied natural gas (LNG). They are expected to generate profits that will likely be passed on to shareholders in the form of share buybacks and dividends. This could benefit investing in energy stocks during the energy transition.
How do we position ourselves?
Clearer, the water. Well, here we wanted to refer to gas rather... First Trust Natural Gas ETF (FCG) maintains about 50 companies related to the natural gas industry. Most are typical actions, but a small part is made up of master limited partnerships.