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zarin taslima
Jul 17, 2022
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The biggest disadvantage of this method is that it is easy to miss companies with growth potential. For example, Facebook (FB) and Berkshire (BRK.B) have not paid dividends, so they will not be selected as constituent stocks by this strategy. Why don't these good companies pay dividends? Because they think investors are too stupid. Just kidding, because management believes that the money saved by not paying dividends will allow the company to grow more rapidly, and this is indeed reflected in the share prices of these two stocks. Net worth growth rate, revenue company banner design growth A company's assets are net worth after deducting all liabilities, so it's also a good idea to choose a company that has a growing net worth or is expected to grow in revenue. 3. Fund Manager's Personal Strategy Net profit, ROE, ROI, PB, dividends, etc. can all be used as variables for SmartBeta. In my article " If Buffett was a Taiwanese, he would choose these 20 stocks ", I mentioned Buffett's stock selection. Strategy: ROE>20%, net profit before tax>10%, gross profit margin>40%. If applied to the stock selection of the S&P 500 index fund, the "Buffett Value S&P 500 ETF", a smart beta ETF, was born. Is the ETF after the fundamental reform really stronger? SPY, VOO big fight Let's take the SPY ETF as an example. The index it tracks is the S&P 500 Growth Index (S&P 500 Growth). This index is based on the constituent stocks of the S&P 500. It is an ETF composed of companies with high sales growth and particularly high ROE. . The annual fee for SPY is 0.04 and the average PE is 26.73. 1 Image source: provided by the author 2 Image source: provided by the author We compared SPY with VOO (tracking the S&P 500 index) and found that in the 10 years from the establishment of VOO in 2010 to the middle of 2019, SPY's stock selection strategy will be more profitable than VOO by about 10%. In terms of time, the difference between the two is actually very small.
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