Very interesting article on the topic of quality shares by $SPGI (+0,65 %) Exploring the Principles of Consistency and Efficiency in Free Cash Flow Metrics
Stay tuned, just keep DCA'n and sit back and relax while the Orange Man beats the markets down. Nothing has changed for the companies themselves (Google, Apple, Nvidia), they are still cashing in, delivering strong products and selling like never before. Don't panic, just big Black Friday deals in April! 😎
After much deliberation and a lot of tax calculations, I have decided to sell my long-standing Nasdaq ETF $CSNDX (-0,04 %) to sell. The P/E of ~40 was just too hot for me and the ever increasing weighting of bubble-like stocks like $PLTR (+0,01 %) and $MSTR (+0,82 %) (and a few others that don't excite me at all) really got on my nerves. In my X-Ray Holdings analysis, I saw how they kept creeping up - that was enough for me. What's more, my US and tech allocation has continued to grow in recent years. Not dramatically, but more than I would like.
So I completely liquidated the Nasdaq and reallocated the money: 75% into an S&P 500 Quality Aristocrats ETF $QUS5 (+0,1 %) and 25 % into an S&P Global Quality Aristocrats ETF $QDEV (-0,23 %) . I want to invest in companies that really make money and not just sell fantasies. The two ETFs are still fairly new and currently have little volume and AUM (I am aware of the risk). But they fit my strategy perfectly: only companies with at least 10 years of positive free cash flow (FCF), high FCF margin and strong ROIC. Exactly my thing! 🎯
Sure, the ETFs might take a while to get bigger, but I'm all about long-term quality and stable cash flows - no hype, no gambling! 🚀📈
SPDR has recently created an ETF on the "S&P 500 Quality FCF Aristocrats" index, therefore factorial, with an annualized return of 16.56% (TR) over the last 10 years. ETF of two months and small, 6 million. (a normal S&P500 13.49%) It invests in stocks with positive and growing free cash flow which therefore suffer less from economic macrocycles and are in less cyclical sectors. Furthermore, having the constraint of 60% maximum for each nation exposes you less to the U.S. trend. While for U.S. stocks it takes them with the criteria indicated above and not by capitalization outperforming the normal S&P 500. The ETF that I linked above is in fact the same version, but limited to the U.S. and if you look at the graphs it outperforms the S&P 500 by a lot tr
FCF indicates with positive and growing cash flow over the last 5 years.
Index strategy sounds good, but whenever an ETF dedicates 50% or more of its allocation to its top 10 positions, I feel like I might as well use it as a shopping list for single stocks rather than paying fees for the ETF. And guess what, the result is pretty similar to my current stock portfolio anyway :)
