Ask HN: How do you find funds to invest in?
How do you find funds to invest in? There are more funds than stocks out there. I have a 5 year investment horizon, and are willing to take on a large risk.
If I were you, I’d go with Vanguard index funds, which have the lowest fees in the industry.
I would pick a fund/funds that matches my risk target/preferences (e.g. equity funds riskier than bonds, small cap riskier than large cap/overall market, foreign riskier than domestic). If I had a very large risk tolerance, I might also allocate a small percentage of your portfolio to single name stocks.
Lastly, I’d just keep in mind the risk you’re taking with your investments. A five year time horizon doesn’t strike me as particularly long or compatible with having a high risk tolerance. Investing in equities can give you high returns over a long time horizon, but their volatility means that you can have large negative returns over a short time period (e.g. the S&P had a max decline from its peak of almost 60% during the 2008-9 financial crisis).
(Standard disclaimer about investing being risky, please do your own research as well.) Good luck!
General advice is find low expense ratio, highly diversified funds and let them sit. Schwab, Fidelity and Vanguard all have excellent options. https://www.bogleheads.org/wiki/Three-fund_portfolio
It sounds like you are looking for something a little more aggressive though. Wisdomtree and State Street offer ETFs tracking a variety of indexes. Keep an eye on expense ratio though. Anything over 0.75% is rather high.
Also, as a side note ETFs can provide tax-advantages over mutual funds when you sell.
Pick a global/US index, then find the cheapest fund or ETF which tracks that index on the platform that you're using. That's it.
If you want something more than index funds - buy stocks yourself. Managed funds seem kind of pointless to me.
Don't touch managed funds, the fees are too high to be worth it. Don't touch index funds with high fees either. In fact once you've picked a mix of geography and stock/bond ratio find whatever index fund has the lowest fees.
In terms of picking equity Vs bond ratio, if you're aggressive go 75% equity. I think (might be wrong) returns actually go down over 75%. For geography just match the world economy.
The Intelligent Investor (By Benjamin Graham) covers the whole thing with sources and statistical backing. I've been following this for 2 decades and made about 7% per annum so I'm happy. It's low stress, low touch, low risk, decent return and compatible with various tax wrappers (pensions etc). What's not to like.
In addition to all the common-sense advice (get diverse [probably index] funds, balance them appropriate to your situation, avoid high fees etc), here are some tools I use:
- etfdb, an outstanding repository of information about individual exchange-traded funds. https://etfdb.com/
- morningstar x-ray, a platform for evaluating the balance of an entire portfolio. Good for seeing where your exposure is given different hypotheticals. https://www.tdameritrade.com/education/tools-and-calculators...
- fossilfreefunds.org, an engine for evaluating the carbon exposure for funds. There's a staggering amount of oil/gas/coal currently on the books as value for companies that ultimately will need to stay in the ground. You and me likely aren't running in the circles capable of picking the winners in this carbon bubble, so I generally try to avoid my exposure (I don't want to left holding that bag). https://fossilfreefunds.org/
Frankly, if comfortable with large risk, I would be looking at crypto, specifically ETH, SOL, ADA and maybe some meme-coins. I don't think any public stock market funds offer that kind of risk/reward at the moment for the speculative investor.
> I have a 5 year investment horizon, and are willing to take on a large risk.
These two statements would be considered contradictory by common financial standards. 5 year horizon means you need the money in 5 years. However, high risk means that in 5 years (a short amount of time compared to normal equity volatility) there's a sizeable probability that you will have negative returns.
I recommend the questionnaire here as a starting point:
https://retirementplans.vanguard.com/VGApp/pe/PubQuizActivit...
Shameless plug: You can sign up for the LOGICLY platform. We have a screener with about 100k funds including all US ETFs and mutual funds.
The answer to your question is "it depends". Mainly on your level of involvement in your portfolio and what your goals are in life. Also is your account qualified or non-qualified (taxable vs non-taxable). So there's no one-size-fits-all.
Personally, I am a "set it and forget it" kind of person. You can buy a low-cost target date mutual fund that takes care of all the portfolio management under the hood. If this is in a taxable account - you may have the benefit of tax free portfolio management (Youll have to check if the fund has paid or could pay out capital gains that would be taxable).
Ultimately on a long timescale I wouldn't get distracted by the side shows (highly focused thematic funds). Bet on broad diversification with low management fees and dividend reinvestment and you'll be golden.
Caveat: I dont want to sound overly prescriptive. Again, theres no one-size-fits-all solution.
Pick a reputable company like Vanguard and sift through their categories of funds (index, sector, bonds, REITs, etc). Each will come with its own risk profile and past returns, so from there filter down into an investment thesis. Think Silicon Valley will keep doing well? Then consider a tech-heavy fund. Want to cash in on real estate plays? Then look into the holdings of their REITs.
Once you do that, find equivalent funds across the various companies, and pick the one which has the lowest fees.
For increased risk, put heavy allocation into a single sector. For reduced risk, pick multiple asset classes (e.g. bonds and international). For the most conventional options, look at the composition of target date funds, which balance risk geographically and temporally.
Once you have a picture for what funds you want, use a screener to explore from there. Iterate on the thesis as needed
It seems to be a bad idea to pick funds based on last months market performance. The ARKK fund used to be a hotshot. After Tesla went down today, they are now in trouble.
"What to expect from funds after they gain 100% or more in a year? Trouble, mostly." - Jeff Ptak (Morningstar)
https://www.morningstar.com/articles/1066496/ark-innovation-...
Why not go for low fee ETFs? They outperform most fund managers
If you are willing to take on a large risk put it in crypto. It may outperform the best fund by several orders of magnitude. Or it may go to zero (they say).
If you're willing to take on a large risk, just buy some TQQQ or UPRO. These are leveraged ETFs for the NASDAQ 100 and S&P 500 respectively.
I largely follow the "Three-fund portfolio"
https://www.bogleheads.org/wiki/Three-fund_portfolio
For finding the funds - I look for passively managed funds with low expenses ratios. I use Fidelity and Merrell Lynch as my brokerages and I largely prefer ETFs over index funds.
> I have a 5 year investment horizon […]
This seems… short. Can you put more context on why it is five years and not more?
I keep it very simple with Vanguard. I have some of my private pension with them - 20% UK gov bond index fund and 80% in V3AM - EGS global all cap.
Part of savings is with Vanguard as well. 40% emerging markets VFEM, 35% FTSE developed world VEVE and 25% in global small cap index fund.
My horizon is longer than yours though. 10+ years.
5 years - large risk. Those are contradictions. A 5 year investment horizon going to be some kind of fixed income stream.
In general though when searching for a fund you want to look for low cost index funds. The lower cost the better.
Can't go wrong with Vanguard index funds. But educate yourself first. Knowing about the stock market and how it works earns you more dividends than actual stocks.
Disclaimer: not affiliated, but I hold Vanguard index funds.
I've used it only a little bit, but Morningstar[0] has detailed writeups about funds. Some of their stuff you have to pay for, but I find that their free content is enough.
[0] www.morningstar.com
I find and follow seemingly credible investors on twitter and take their advice on stock picks, funds, and assets.
Most funds are probably “risk averse” and usually exist to charge you fees.
Index funds are often a better bet on a net basis.
My contrarian view is to NOT trust any company/fund. Take the time to learn how to invest. Then, buy your own individual stocks with your own research. You'll reap huge benefits.
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VTSAX is very low fee
Define large risk.
Crypto is the best bet if you are willing to take a large risk. Downside is 50% at most. Upside pretty infinite