7Mon·

DCA in quality instead of width 🌍

Why buy the entire world ETF when you can just pick the 100 best quality companies that outperform the MSCI World and S&P500? The same applies to the top 100 stocks from the S&P 500 -> $QUS5 (-0.26%)

02.06

SPDR S&P Developed Qual Aristocrats ETF

Bought at €9.243

14 Comments

TotallyLost@TotallyLost

7Mon

why not buy the MSCI World Quality $XDEQ? or the $GGRG
At the end of the day, you are mapping the quality factor, it is difficult to say which system best exploits this, which is why I am a fan of diversifying the individual factors with different methodologies.

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K@TechNav

7Mon

@TotallyLost Quite simply, index concepts such as the MSCI World Quality or WisdomTree (as if dividends automatically had anything to do with quality) simply don't deliver enough performance for me.

In the end, only one thing counts for me: that I have more assets in my portfolio after X years. That's why I only choose based on performance.

No, this S&P does not just reflect the classic "quality" factor, but focuses on high ROIC + positive free cash flow. Only companies that consistently generate positive cash flow over 10 years are included in the index.

From this perspective, it is clearly the superior strategy for me in every respect.

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TotallyLost@TotallyLost

7Mon

@TechNav Another word for the quality factor is profitability.
ROIC, dividend growth, ESP growth, free cash flow... these are all included.

And it is generally assumed that 90% of returns can be explained by the 5-factor model.

Or how would you deduce that this product has done better.
I would say the answer is quality factor exposure.

But it's certainly an interesting product that I'll take a closer look at.

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Stulle 🥪@Stullen-Portfolio

7Mon

Yes, raisin-picker ETF! ✌️😁🚀

I like the idea of being broadly diversified when investing while avoiding the dregs that come with too broad a diversification 🚀...apparently you do too. Good luck with that...and a lucky hand for a combination with other raisin-picker ETFs 🍀🫶

Greetings
🥪

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Mo@BigMo

7Mon

A few reasons:

- less diversification
- TER 0.38 %
- Fund volume € 25.37 million (spread says hi)

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K@TechNav

7Mon

@BigMo Please, these are not convincing arguments...

- The diversification is sufficient in my opinion (both sectorally and geographically). The index has a strong performance and I personally prefer 100 selected stocks to 1500, but that is of course subjective.

- I find the TER of 0.35% (Getquin must correct here) reasonable as long as the return more than compensates for the additional costs, 12.6% instead of 7-8% (World) over the last 10 years.

- The fund volume is still 25 million, but the spread is irrelevant as I work with limit orders and set the NAV as the purchase price.

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Mo@BigMo

7Mon

@TechNav If the points are okay for you: fair 🙂

But:
In the current market phase, the ETF may outperform S&P 500 or MSCI World, but the history is simply too short to make a definitive statement here.
As recently as January, the performance was almost identical.

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K@TechNav

7Mon

@BigMo The history seems short if you only look at the SPDR ETFs. However, if you look directly at the index, for example on the S&P website, you will find a history of over 10 years. Although this is a retrospective, theoretical illustration, as the index did not yet exist at that time, I was nevertheless convinced by the index methodology behind it.

https://www.spglobal.com/spdji/en/indices/dividends-factors/sp-developed-quality-fcf-aristocrats-index/#overview

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K@TechNav

7Mon

@BigMo You might also be interested in the article 'A Historical Perspective on Factor Index Performance across Macroeconomic Cycles', see below.

https://www.spglobal.com/spdji/en/documents/education/education-a-historical-perspective-on-factor-index-performance-across-macroeconomic-cycles.pdf

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Mo@BigMo

7Mon

@TechNav Really very interesting, thank you!

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Tenbagger2024@Tenbagger2024

7Mon

The ETF contains some good companies.
But there are some companies that I wouldn't necessarily have expected to be included.

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K@TechNav

7Mon

@Tenbagger2024 I'm not 100% enthusiastic about all of them either. Which ones surprised you?

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Tenbagger2024@Tenbagger2024

7Mon

@TechNav
I have only seen a few dividend stocks.
Such as some tobacco companies, or Gilead and Cisco.
Fortescue is also a dividend stock which is very cyclical and needs a lot of patience.
I don't expect much more from Apple either.
That's why I'm surprised by the selection.
But I also think some companies are great.
That's why I'm not such an ETF fan

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Tenbagger2024@Tenbagger2024

7Mon

@TechNav
Have a look at $FJ2P
Not quite as US heavy but still a good performance

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