Investment companies keep cranking out new exchange-traded funds (ETFs) at a rapid pace—more than 170 new ones just this year, for a total of more than 1,600. And as always, many of the new ETFs are too narrowly focused, too complex and/or too risky for small investors. These include new ETFs focusing on weight loss…artificial intelligence and robotics…and 3-D printing. There’s even a new one that lets shareholders vote on which stocks should be in the portfolio.
But there are a handful of new ETFs that are distinctive and appealing, including…
Fidelity Dividend ETF for Rising Rates (FDRR). This ETF focuses on dividend-paying large- and mid-cap stocks with histories of positive returns when interest rates have risen, as they are likely to do in the coming years. A dividend-paying company is more likely to be able to avoid a drop in share prices if, for instance, it has enough free cash flow to avoid borrowing heavily at higher interest rates.
iShares Edge MSCI Minimum Volatility USA Small-Cap ETF (SMMV). This fund tracks an index of 370 small-cap stocks that have been significantly less volatile in down markets than most small-cap stocks. The approach is similar to that used by its large-cap sibling, the iShares Edge MSCI Minimum Volatility USA ETF, which over the past three years has outperformed the Standard & Poor’s 500 stock index with 20% less volatility.
Vanguard International Dividend Appreciation ETF (VIGI). This foreign version of the successful Vanguard Dividend Appreciation ETF, which has held up better in market downturns than the S&P 500, tracks an index of 200 foreign stocks that are thought to have the best prospects for steadily increasing their dividends.