In this article, we discuss 5 cheap ETFs to invest in for beginners. If you want to see more stocks in this selection, click 10 Cheap ETFs to Invest in For Beginners.
5. First Trust Large Cap US Equity Select ETF (NASDAQ:RNLC)
First Trust Large Cap US Equity Select ETF (NASDAQ:RNLC) seeks investment results that correspond to the price and yield of the Nasdaq Riskalyze US Large Cap Index. The fund was established in 2017, with an expense ratio of 0.60% and net assets exceeding $20 million. The ETF has 357 holdings in its portfolio.
International Business Machines Corporation (NYSE:IBM) is the largest stock in First Trust Large Cap US Equity Select ETF (NASDAQ:RNLC)’s portfolio. With a market cap exceeding $125 billion, International Business Machines Corporation (NYSE:IBM) is a tech firm that operates through four business segments – Software, Consulting, Infrastructure, and Financing.
BofA analyst Wamsi Mohan on April 20 raised the price target on International Business Machines Corporation (NYSE:IBM) to $165 from $162 and maintained a Buy rating on the shares after the company posted “solid” quarterly results and gave a “strong” guidance for 2022. The company has made notable progress in shifting its portfolio, which is now defensive and can perform well in a tough macro environment, and he expects continued revenue growth beyond 2022, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 43 funds were bullish on International Business Machines Corporation (NYSE:IBM) at the end of Q1 2022, compared to 44 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest shareholder of the company, with 4.46 million shares worth about $580 million.
Here is what St. James Investment Company has to say about International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
4. Global X Metaverse ETF (NASDAQ:VR)
Global X Metaverse ETF (NASDAQ:VR) is a relatively new exchange traded fund, founded in April 2022. The ETF has net assets of $2.11 million and an expense ratio of 0.50%, with 40 total holdings. Global X Metaverse ETF (NASDAQ:VR) invests in companies that will benefit from the development and commercialization of the metaverse.
One of the largest holdings in Global X Metaverse ETF (NASDAQ:VR)’s portfolio is NVIDIA Corporation (NASDAQ:NVDA), an American multinational technology firm that specializes in computer hardware and software, cloud computing, semiconductors, artificial intelligence, GPUs, consumer electronics, and video games.
BofA analyst Vivek Arya maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) on June 29 but lowered the price target on the shares to $220 from $270. The analyst observed that tighter global monetary policy, political unrest, and consumer weakness can possibly pressure chip demand in the second half of 2022 and 2023.
According to the first quarter database of Insider Monkey, 102 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), compared to 110 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is a significant shareholder of the company, with 7.3 million shares worth about $2 billion.
Here is what RiverPark Long/Short Opportunity Fund has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
3. The Gen Z ETF (NASDAQ:ZGEN)
The Gen Z ETF (NASDAQ:ZGEN) is an actively-managed exchange-traded fund that invests in the top 50 American listed securities that rank the highest on the Gen Z scoring methodology, which considers factors including use, values, innovation, and disruption. This determines a company’s position and weightage within The Gen Z ETF (NASDAQ:ZGEN). The fund was established at the end of 2021 and has net assets of $1.9 million, with an expense ratio of 0.60%.
The largest stock in The Gen Z ETF (NASDAQ:ZGEN)’s portfolio is Enphase Energy, Inc. (NASDAQ:ENPH), a distributor of home energy solutions for the solar photovoltaic industry in the United States. On June 10, BMO Capital analyst Ameet Thakkar raised the price target on Enphase Energy, Inc. (NASDAQ:ENPH) to $240 from $215 and reiterated an Outperform rating on the stock. Enphase Energy, Inc. (NASDAQ:ENPH) can gain significant market share in the scattered European installer market, while increasing utility prices, higher consumption, and energy security leave E.U. customers with limited options but to shift to solar, the analyst told investors.
According to Insider Monkey’s database, 57 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH) at the conclusion of Q1 2022, up from 50 funds in the previous quarter. Bruce Emery’s Greenvale Capital is a prominent shareholder of the company, with 500,000 shares worth about $101 million.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q1 2022 investor letter:
“Enphase Energy (NASDAQ:ENPH) is a key solar holding that should be able to take advantage of greater incentives for solar installations in many geographies. The company was also a strong contributor for the quarter, overcoming pressures of a higher discount rate on their strong projected future earnings, raw material inflation and supply chain challenges as their long-term value was reaffirmed.”
2. iShares MSCI China Multisector Tech ETF (NASDAQ:TCHI)
iShares MSCI China Multisector Tech ETF (NASDAQ:TCHI) seeks to track the investment results of an index consisting of large and mid-cap Chinese companies in the technology sector. These companies specialize in ecommerce, streaming, and automation. The ETF was established in January 2022, with net assets of $8.5 million and an expense ratio of 0.59%. iShares MSCI China Multisector Tech ETF (NASDAQ:TCHI)’s portfolio has 175 holdings.
Pinduoduo Inc. (NASDAQ:PDD) is the biggest stock in iShares MSCI China Multisector Tech ETF (NASDAQ:TCHI)’s portfolio. The company operates an e-commerce platform in China. On May 31, Citi analyst Alicia Yap raised the price target on Pinduoduo Inc. (NASDAQ:PDD) to $62 from $61 and kept a Buy rating on the shares. The company’s Q1 results were stronger than forecasted against “relatively muted” expectations, the analyst told investors. The analyst believes Duoduo Grocery possibly benefited from the lockdown.
Among the hedge funds tracked by Insider Monkey, 36 funds were bullish on Pinduoduo Inc. (NASDAQ:PDD) at the end of Q1 2022, up from 34 funds in the preceding quarter. Chase Coleman’s Tiger Global Management held the largest position in the company, comprising 5.7 million shares worth $231.5 million.
Here is what Baillie Gifford has to say about Pinduoduo Inc. (NASDAQ:PDD) in its Q2 2021 investor letter:
“As many countries enjoy a relaxation of Covid restrictions, Mr Market is focussed on short-term beneficiaries of ‘the pleasure after the plague’. There are interesting parallels with the Roaring 20s here, but to our minds, they extend beyond post-pandemic hedonism. Much of the new wealth created in the 1920s was patchily distributed and accompanied by a pervasive sense that the older generation had let down younger people. In 1920, John F. Carter, an irate 23-year-old wrote “the older generation had certainly pretty well ruined this world before passing it on to us. We have been forced to live in an atmosphere of ‘tomorrow we die,’ and so, naturally, we drank and were merry.”
In a similar vein, some of the greatest Growth opportunities are materializing from the companies that are shifting humankind towards more sustainable ways of consuming by driving efficiencies and eliminating surplus. Pinduoduo’s ‘farm to table’ platform is one example – cutting out huge waste in farm produce and short circuiting layers of infrastructure by matching Chinese food supply and demand through a group buying model. In a similar vein, Meituan is well on the way to developing China’s primary ‘Software as a Service’ ecosystem for food distribution which we believe has a strong chance of replacing wasteful wet markets as the primary channel for transacting in produce.
Pinduoduo’s share price pulled back following news that Chinese regulators are investigating possible anti-competitive activities by the country’s large online companies. However, Pinduoduo appears well placed to navigate such regulatory scrutiny in the long-term, helped in part by its community-buying business model that benefits consumers, manufacturers and farmers alike. Its business fundamentals are stellar– the company remains the largest Chinese e-commerce platform, with over 820 million annual active users (surpassing Alibaba and JD.com), while revenue growth increased by 239% over the previous year.”
1. First Trust Dorsey Wright Momentum & Low Volatility ETF (NASDAQ:DVOL)
First Trust Dorsey Wright Momentum & Low Volatility ETF (NASDAQ:DVOL) seeks investment results that track the price and yield of the Dorsey Wright Momentum Plus Low Volatility Index. First Trust Dorsey Wright Momentum & Low Volatility ETF (NASDAQ:DVOL) was established in 2018, and currently the portfolio holds 50 stocks. The ETF has an expense ratio of 0.60% and total net assets exceed $85 million.
The biggest holding of First Trust Dorsey Wright Momentum & Low Volatility ETF (NASDAQ:DVOL) is The Procter & Gamble Company (NYSE:PG), the American multinational branded consumer packaged goods firm. Deutsche Bank analyst Steve Powers on June 21 maintained a Buy rating on The Procter & Gamble Company (NYSE:PG) but lowered the price target on the shares to $157 from $171 following Deutsche’s consumer conference in Paris.
Among the hedge funds tracked by Insider Monkey, 72 funds were bullish on The Procter & Gamble Company (NYSE:PG) at the end of Q1 2022, up from 67 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading shareholder of the company, with almost 10 million shares worth $1.5 billion.
You can also take a look at 10 EV Stocks to Buy as Tesla’s Market Share Declines and The 10 Best Bank Stocks to Buy Amid Rising Inflation.
