Two investment funds for investing in Tesla with a minimum of risks
- SoFi Select 500 ETF
- iShares U.S. Consumer Goods ETF
The stock market has been growing steadily lately, driven by one of the most popular companies of our time, Tesla (NASDAQ: TSLA).
Revenue for the third reporting period was $ 8.77 billion. At the same time, it was the fifth profitable quarter in a row: the company earned $ 331 million with a gross margin of 27.7%.
Since the beginning of the year, Tesla shares have grown by more than 600%; $1 000 which had been invested in January 2020 could now turn into more than $7 000. However, TSLA shares are very volatile. This is why many investors avoid including the automaker’s shares in their portfolios.
One of the ways to avoid volatility is to buy shares in an Exchange-Traded Fund (ETF), of which TSLA is a component.
On December 21, the company will be included in the S&P 500 index. As a result, every index fund based on the S&P 500 will be forced to buy Tesla assets. Currently, more than 150 ETFs are already invested in Elon Musk’s brainchild. In this article, we will look at two of them.
- SoFi Select 500 ETF
- Cost: $13.70;
- Dividend yield: 1.17%;
- Commission – no;
SoFi Select 500 ETF (SFY) gives investors access to the 500 largest (by market capitalization) publicly traded companies in the United States.
SFY is based on the Solactive SoFi U.S. 500 Growth index. The fund was launched in April 2019 and, as part of attracting investors, does not charge a commission for the first three years of operation.
Approximately 28% of the capital of more than $ 110 million is invested in the top ten of the portfolio. The list is headed by Amazon (AMZN), Berkshire Hathaway (BRKa), Microsoft (MSFT), Apple (AAPL), and Tesla with a share of 1.81%.
Since the beginning of the year, SFY has risen 22% and reached an all-time high in late November. Short-term profit-taking on some fund components may put pressure on the ETF itself. However, the weight of each company is not large enough for it to have a strong impact on the value of the entire portfolio. Experts recommend investors who believe in the further growth of companies in this ETF, to think about buying on a drawdown.
2. iShares U.S. Consumer Goods ETF
- Cost: $168.70
- Dividend yield: 2.01%
- Commission: 0.43%
iShares U.S. Consumer Goods ETF (IYK) allows you to invest in American manufacturers of consumer goods such as food, automobiles, and household items. The fund was launched in June 2000 and manages a portfolio of assets worth $711 million.
Currently, IYK includes 96 components of the Dow Jones U.S. Consumer Goods index. Approximately 54% of the total capital is invested in the top ten companies.
Tesla accounts for 15.03% of total assets, one of the leaders in the consumer goods sector Procter & Gamble (NYSE: PG), and soft drink giant Coca-Cola (NYSE: KO).
Since the beginning of the year, IYK has grown by more than 25% and reached an annual high on December 7. As a result of the stock market growth, the stock is somewhat overbought. Expert advice: wait for a possible correction to the $155 mark.