Broadly speaking, the following investments are those that Axos Invest analyzes for its Core Portfolios which it recommends to clients:
US Market (Stocks) represents a claim of ownership in corporations based in the United States. Despite the slump in US Equities in 2008-2009, we have seen strong growth of the economy in the United States in the 20th century as well as the beginning of the 21st. Indeed, the US Market has already made up all losses experienced during the recent financial downturn. Increasingly, U.S. corporations are conducting more business overseas, so they tend to benefit from growth in international developed and emerging markets.
To give investors access to the US Market, we use the Vanguard Total Stock Market ETF: VTI. For the purpose of WiseHarvesting, we also use the Schwab U.S. Broad Market ETF: SCHB and the State Street SPDR S&P 500 ETF: SPY.
Foreign Markets (Stocks) represent a claim of ownership in foreign corporations based in developed nations (e.g., Europe, Japan, etc.). Foreign Markets have experienced the hardship of their own; however, they remain an integral part of the world economy. Similar to U.S. corporations, many foreign corporations have global reach and benefit from the growth of the world economy.
To give investors access to Foreign Markets, we use Vanguard FTSE Developed Markets ETF: VEA. For the purpose of WiseHarvesting, we also use the Schwab International Equity ETF: SCHF and the iShares MSCI EAFE ETF: EFA.
Emerging Market (Stocks) represents a claim of ownership in foreign corporations based in the world's developing economies (e.g. Brazil, Taiwan, South Africa, China, India, etc.). As a whole, Emerging Markets represent approximately half of the world's GDP, although this figure is expected to grow as they further develop. While Emerging Markets are considered more volatile, they experience fast economic growth and are expected to generate higher returns than the equities of their developed counterparts.
To give investors access to emerging equities, we use the Vanguard FTSE Emerging Markets ETF: VWO. For the purpose of WiseHarvesting, we also use the iShares Core MSCI Emerging Markets ETF: IEMG and the iShares MSCI Emerging Markets ETF: EEM.
US Treasuries (Bonds) are debt securities issued by the federal government and its agencies. These debt securities are used by the government to fund new or existing projects. Unlike equities, US Treasuries provide a steady income in the form of interest and principal payments. US Treasuries are considered some of the safest investments in the world. While the returns can be far less than stocks, they provide good diversification and steady income to investors.
In addition, Short-Term Treasuries (Bonds) have the added safety of minimizing interest rate risk, though they do yield less than intermediate or longer term bonds.
To give investors access to US Treasuries, we use the Vanguard Intermediate-Term Government Bond Index ETF: VGIT.
Learn more from ETF sponsor: VGIT
To give investors access to Short-Term Treasuries, we use Vanguard Short-Term Government Bond Index ETF: VGSH.
Learn more from ETF sponsor: VGSH
Investment Grade Corporate Bonds are debt securities issued by U.S. based corporations for the purpose of funding new and existing business activities; essentially they represent money that has been lent to U.S. companies which the companies pay back with interest. Because corporations are subject to higher credit risk and illiquidity than U.S. Government Bonds, they produce higher yields. These bonds are issued by corporations rated as investment-grade – meaning that rating agencies have determined their risk is among the lowest of corporate bonds.
To give investors access to investment-grade bonds, we use iShares Investment Grade Corporate Bond ETF: LQD. For the purpose of WiseHarvesting, we also use the Vanguard Intermediate-Term Corporate Bond Index ETF: VCIT.
To give investors access to short term investment grade bonds, we use Vanguard Short-Term Corporate Bond ETF: VCSH.
Learn more from ETF sponsor: VCSH
High-Yield Corporate (Bonds) are debt securities issued by U.S. corporations with a credit rating below investment grade. These securities generally have a higher yield than High-Grade Corporate (Bonds), and also carry a higher risk due to the credit worthiness of the issuers. Historically these securities have had more volatility of returns and have had a relatively high correlation with U.S. equities. While all bonds carry credit risk – the risk the company will repay its debts – by investing in shorter duration bonds an investor can minimize exposure to additional risk in the form of interest rate fluctuations. By using High-Yield Corporate, Axos Invest seeks to minimize investors’ exposure and risk to a rise in interest rates.
To give investors access to High-Yield Corporate, we use State Street Global Advisors Barclays Short Term High Yield Bond Index ETF: SJNK. For the purpose of WiseHarvesting, we also use the PIMCO 0-5 Year High Yield Corporate Bond Index ETF: HYS and the iShares 0-5 Year High Yield Corporate Bond ETF: SHYG.
TIPS (Bonds) or Treasury Inflation-Protected Securities (Bonds) are bonds issued by the federal government that are protected against inflation. As TIPS are inflation-indexed, their principal and coupon payments are adjusted against the Consumer Price Index (CPI). Because TIPS eliminates the inflation risk of nominal bonds, they earn lower yields than their non-protected counterparts.
To give investors access to TIPS, we use iShares Barclays TIPS Bond Fund ETF: TIP.
Learn more from ETF sponsor: TIP
Real Estate Investments Trusts (Stocks) or REITs hold both commercial and residential properties. While REITs may hold the inherent risk of non-payment, they provide two major benefits. First rents increase with rising inflation, REITs protect investors against inflationary movements. Second, as prices rise either due to inflation or due to active management of the portfolio of properties, investors benefit from appreciation in the price of the REIT. Finally, Real Estate investments provide an opportunity for increased diversification of an investor's holdings.
To give investors access to REITs, we use Vanguard REIT ETF: VNQ. For the purpose of WiseHarvesting, we also use the iShares U.S. Real Estate ETF: IYR and the iShares Cohen & Steers REIT ETF: ICF.
Additional Investments Available in the Portfolio Plus Package
While Managed Portfolios recommends Core Portfolios to clients, clients may also construct their own portfolios from additional investments available in the Portfolio Plus package. Portfolios constructed from these investments are not recommendations of Axos Invest.
Blockchain (Stocks) is a decentralized digital ledger that aims to provide increased security and transparency (among other things) to digital transactions.
To obtain exposure to blockchain technology, clients can choose to invest in Reality Shares' Nasdaq NextGen Economy ETF: BLCN and Amplify's Transformational Data Sharing ETF: BLOK.
Precious Metals (Stocks) are commodities whose prices generally increase with scarcity. In order to offer our clients exposure to increases in prices of precious metals, instead of buying the actual commodities, this Axos Invest offers ETFs which hold the stocks of companies that produce or extract different metals and minerals.
To obtain exposure to precious metals companies, clients can choose to invest in: SPDR S&P Metals & Mining ETF: XME and iShares MSCI Global Metals & Mining Producers ETF: PICK
Internet Innovators (Stocks) consists of companies that seek to benefit as more of our daily routines are conducted online. Think e-commerce, streaming services, social media, and more across your computer and mobile phone. These companies generally have the ability to launch and scale new services quickly. You may notice you're managing your financial future through the Internet right now!
To obtain exposure to internet companies, clients can choose to invest in: First Trust Dow Jones Internet Index Fund: FDN and SPDR S&P Internet ETF: XWEB.
Technology (Stocks) consists of technology companies seeking to profit by providing consumers and businesses with the gadgets and hardware they desire as technology becomes increasingly implanted in our daily lives. Examples include chip makers, digital storage providers, semi-conductor builders, and telecom services.
To obtain exposure to internet companies, clients can choose to invest in Vanguard Information Technology ETF: VGT and Technology Sector SPDR Fund: XLK.
Consumer Staples (Stocks) are items such as food, beverages, and general household items.
To obtain exposure to consumer staples, clients can choose to invest in Vanguard Consumer Staples ETF: VDC and Consumer Staples Select Sector SPDR Fund XLP.
Socially Minded (Stocks) consists of companies that, among other things, are more engaged in environmental or social justice initiatives, and typically exclude companies that produce or sell addictive goods or services (e.g., tobacco or gambling).
To obtain exposure to socially minded companies, clients can choose to invest in iShares MSCI USA ESG Select ETF: SUSA and iShares MSCI KLD 400 Social ETF: DSI
Municipal Bonds (Bonds) are issued by non-federal government entities, such as a state or county, to fund local projects or daily operations. These are an alternative to corporate bonds which lend money to companies.
To obtain exposure to U.S. small cap companies, clients can choose to invest in Vanguard Small-Cap ETF: VB and Schwab US Small-Cap ETF: SCHA.
Small Cap (Stocks) consists of companies across industries with a market cap, or a total equity value, of between $300 million and $2 billion – these are not local businesses.
To obtain exposure to U.S. small cap companies, clients can choose to invest in Vanguard Small-Cap ETF: VB and Schwab US Small-Cap ETF: SCHA.
Mid Cap (Stocks) consists of companies across industries with a market cap, or a total equity value, of between $2 billion and $10 billion and offers exposure to companies with sizable market capitalizations that may still have room to grow.
To obtain exposure to U.S. mid cap companies, clients can choose to invest in Vanguard Mid-Cap ETF: VO and Schwab U.S. Mid-Cap ETF: SCHM.
Large Cap (Stocks) consists of companies operating across all industries with a market cap, or a total equity value, in excess of $10 billion.
To obtain exposure to U.S. large cap companies, clients can choose to invest in Vanguard Large-Cap ETF: VV and Schwab US Large-Cap ETF: SCHX
Clean Energy (Stocks) consist of companies that are engaged in the production of clean energy or services to companies that produce clean energy (solar, wind, or other renewables). Investors may find this an attractive addition to their portfolios if they wish to invest in companies doing well by doing good for the planet.
To obtain exposure to clean energy companies, clients can choose to invest in iShares Global Clean Energy ETF: ICLN and First Trust NASDAQ Clean Edge Green Energy Index Fund: QCLN.
Healthcare (Stocks) consists of companies are those that provide healthcare as well as the equipment and services needed for the provision of healthcare.
To obtain exposure to healthcare companies, clients can choose to invest in Vanguard Health Care ETF: VHT and iShares U.S. Healthcare ETF: IYH
Water (Stocks) consists of companies that may be well-positioned to benefit from the global demand for water.
To obtain exposure to water companies, clients can choose to invest in Invesco S&P Global Water Index ETF: CGW and PowerShares Global Water Portfolio: PIO.
Utility (Stocks) consists of companies that generate and/or deliver power, water, and other essential services.
To obtain exposure to utilities companies, clients can choose to invest in Vanguard Utilities ETF: VPU and Utilities Select Sector SPDR Fund: XLU.
Home Builders (Stocks) provide U.S. home construction, furnishing, and improvement products and services; pretty much everything that goes into making that New Home milestone a reality.
To obtain exposure to Home Builders, clients can choose to invest in SPDR S&P Homebuilders ETF: XHB and iShares U.S. Construction ETF: ITB.
Defense (Stocks) consists of companies that include those that build the equipment and provide the services that help countries with their defense strategies.
To obtain exposure to Defense, clients can choose to invest in SPDR S&P Aerospace & Defense ETF: XAR and iShares U.S. Aerospace & Defense ETF: ITA.
Artificial Intelligence (Stocks), also known as AI, consists of companies that seek to automate and perform tasks that are currently performed manually by humans.
To obtain exposure to this Artificial Intelligence, clients can choose to Global X Robotics & Artificial Intelligence ETF: BOTZ
Learn more from ETF sponsor: BOTZ
Digital Security (Stocks) consists of companies that provide products and services designed to protect consumers and businesses online.
To obtain exposure to digital security companies, clients can choose First Trust Nasdaq Cybersecurity ETF, CIBR and ETFMG The World's First Cyber Security ETF, HACK.
Banking and Finance (Stocks) consist of banks, insurance companies, credit card companies and other companies engaged in financial services - essentially U.S. companies engaged in the money business.
To obtain exposure to U.S. financial companies, clients can choose Vanguard Financials ETF, VFH and iShares U.S. Financials ETF: IYF.
Marijuana (Stocks) consists of companies that are engaged in marijuana sub-industries, such as pharmaceuticals, biotechnology, and agricultural infrastructure; however, direct investment in companies that directly grow or distribute marijuana is prohibited.
To obtain exposure to marijuana companies, clients can choose ETFMG Alternative Harvest ETF: MJ
Learn more from ETF sponsor: MJ
Wonder Women (Stocks) consists of companies that are led or have a greater female representation within senior leadership than other firms in their sector.
To obtain exposure to wonder women companies, clients can choose SPDR SSGA Gender Diversity Index ETF: SHE.
Learn more from ETF sponsor: SHE
Oil and Gas (Stocks) consists of companies that provide the energy to power everything from manufacturing to transportation.
To obtain exposure to oil and gas companies, clients can choose SPDR S&P Oil & Gas Exploration & Production: XOP and iShares U.S. Oil & Gas Exploration & Production ETF: IEO
Axos Invest, Inc., and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
All investments involve risks, including the loss of principal invested. Past performance of a security does not guarantee future results or success.
Certain investment management account strategies may contain exchange traded funds (ETFs). ETFs are comprised of securities in a given asset class, which may share a similar behavior to those securities and could be subject to a significant level of volatility and risk. Please keep in mind, neither the diversification of any ETF nor the strategy of using multiple ETFs in a portfolio guarantees an investment profit or ensures your investment from market risks or losses. Prior to the purchase of any ETF strategy, you should read the prospectus of each individual ETF carefully and consider the investment objectives, risks, charges, and expenses before you invest or send money. You can receive a prospectus for each ETF in a within the client portal or by e-mailing Axos Invest, Inc., at email@example.com.
An ETF is expected to approximate the performance of the index it tracks, but it may slightly underperform the index due to administrative costs. Less heavily traded ETFs may actually have market values that are significantly higher or lower than the underlying values due to the principle of supply and demand. For example, if a particular sector has fallen out of favor, demand for shares of an ETF in that sector may fall out of favor as well. This could cause the ETF's price to fall further than the underlying value of the fund's actual shares. Like all securities, past performance of any ETF is no guarantee of future results.