10 Years of NoLoad FundX and ETFs
ETFs in NoLoad FundX
The concept of passively managed portfolios of securities
that track an index is not new – NoLoad FundX newsletter
started tracking Vanguard’s S&P 500 Index fund in 1976.
As ETFs proliferated and covered more areas of the market,
we integrated them seamlessly into our system, right alongside
actively managed funds. We believe that an expanded
universe to choose from can provide the best opportunities
so long as we have a disciplined and proven selection process.
We combine ETFs and actively managed funds, classified by
risk, then rank and sort all funds by current performance.
At times, many of the top performing funds are ETFs, and
at other times, actively managed funds have better returns.
But we don’t include just any ETF in our portfolios. The
ETFs in NoLoad FundX represent just a fraction of the
ETFs now on the market. But we sort through the universe
of available ETFs to find those that matter most.
We screen out newer ETFs that lack the 12-month performance
record necessary for us to rank a fund. We also want
to include ETFs with adequate liquidity that can be easily
traded. Asset size and trading volume (the average number
of shares bought and sold in a day) are pretty good – though
not perfect – indicators of liquidity, so we also screen ETFs
by these factors.
We look for ETFs with an average daily trading volume of at
least 30,000 shares. New additions to our listings have at least
$100 million in assets.
We exclude exchange traded notes (ETNs) because they
are structured and regulated quite differently than ETFs.
We also don’t list inverse or leveraged ETFs. We prefer
ETFs that hold a basket of stocks, rather than those that
rely on derivatives. We also don’t list many HOLDRs
because these must be purchased in 100-share blocks.
Finally, some ETFs are simply redundant: many ETFs track the
same index and we usually avoid listing too many duplicates.