Where To Invest Right Now, According To Industry Experts

Where To Invest Right Now, According To Industry Experts
Carl Hazeley

over 1 year ago3 mins

  • G-Squared Private Wealth recommends dollar-cost averaging into large-cap US stocks, with a bias toward quality firms and defensive industries.

  • Investing in private companies via private equity firms offers potential for returns and diversification, according to Unique Wealth.

  • UBS sees opportunities as a result of the Russia-Ukraine war – namely in natural gas and cybersecurity – as Europe seeks to reduce its Russian energy reliance and governments everywhere look to amp up security.

G-Squared Private Wealth recommends dollar-cost averaging into large-cap US stocks, with a bias toward quality firms and defensive industries.

Investing in private companies via private equity firms offers potential for returns and diversification, according to Unique Wealth.

UBS sees opportunities as a result of the Russia-Ukraine war – namely in natural gas and cybersecurity – as Europe seeks to reduce its Russian energy reliance and governments everywhere look to amp up security.

Mentioned in story

US stocks have had a better-than-expected run this earnings season, with the S&P 500 up 9% in July. And if that’s inspired you to buy back into the stock market, you might want to start by looking at where a few of the world’s biggest investors are investing…

Idea #1: Defensive and “quality” stocks

G-Squared Private Wealth recommends taking a conservative approach to buying US stocks: the firm sees the US market as high-risk and low-return, and suggests investing a set weekly amount in large-cap US stocks with a focus on defensive sectors and “quality” firms – those with a track record of consistent earnings growth. It also recommends keeping uninvested money in short-term US government bonds, rather than cash.

Which ETFs are a good place to start?

Healthcare and consumer staples are key defensive sectors, and you can access them with the Health Care Select Sector SPDR Fund (ticker: XLV, expense ratio: 0.1%) and the Consumer Staples Select Sector SPDR Fund (XLP, 0.1%). The Invesco S&P High Dividend Low Volatility ETF (SPHD, 0.3%) and First Trust Morningstar Dividend Leaders Index fund (FDL, 0.45%) offer high-quality, low-volatility exposure to large US companies, while the Invesco S&P 500 Quality ETF ( SPHQ, 0.15%) includes the 100 highest-quality US stocks based on metrics like return on equity and financial leverage.

Idea #2: Private equity

This idea – which comes from Unique Wealth – is looking to capitalize on private company dynamics: the firm thinks private equity firms could be a good bet. About 95% of companies in the US are private, after all, so you’re leaving a lot of opportunities behind if you only focus on those that are publicly listed. And since private markets have historically had a very low correlation to public markets, private equity firms can offer attractive diversification benefits to your portfolio too.

Which ETFs are a good place to start?

You can directly buy shares of private equity giants like Blackstone, Carlyle, and KKR via the stock market, giving you a stake in the overall success of private companies. But buying into several different PE companies will spread your risk across the industry, and you can do exactly that using exchange-traded funds like the iShares Listed Private Equity UCITS ETF (IPRV, 0.75%) and any tracking the Refinitiv Private Equity Buyout Index, which replicates the performance of private equity portfolios by investing in a similar mix of publicly traded stocks.

Idea #3: Cybersecurity

Security has gone way beyond traditional military and defense spending, and nowadays includes food, energy, and cyber. As one example, the disruption to grain exports from Ukraine has highlighted the importance of having improved agricultural yields from other sources. Automation and seed technology can help deliver on that goal – which might be why UBS thinks cybersecurity is a great play in the wake of the Russian invasion.

Which ETFs are a good place to start?

The cybersecurity industry is pretty fragmented, so it can be tough to pick individual winners. Instead, take a look at two of the biggest cybersecurity ETFs: the ETFMG Prime Cyber Security ETF (HACK, 0.6%) and the First Trust Nasdaq Cybersecurity ETF (CIBR, 0.6%).

Idea #4: Natural gas

Ending Europe’s dependency on Russian energy may accelerate the global move away from fossil fuels, with companies in green tech, clean air, and energy efficiency set to benefit. But for now, you can expect to see more spending on traditional fossil fuels. And while big oil companies are clear beneficiaries of that, UBS has pointed out that so too are exporters of liquefied natural gas. They’re set to earn profits that they’re likely to pass onto shareholders in the form of share buybacks and dividends, if their generosity during this period of high commodity prices is anything to go by.

Which ETFs are a good place to start?

This one’s simple: the First Trust Natural Gas ETF (ticker: FCG, expense ratio: 0.6%) holds about 50 companies involved in the natural gas industry. Most are typical stocks, but a small slice is made up of master limited partnerships.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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