While the rapid development of the ETF industry has made it easy for mainstream investors to tap into virtually any asset class, many still prefer to utilize these investment vehicles as building blocks for their portfolios. These “core” holdings are often plain-vanilla funds, like the S&P 500 ETF (SPY), and though they are not the most “unique” funds, they do have the ability to deliver stellar returns over the long run [see 7 Underappreciated Core ETFs].
Many investors assume that plain-vanilla ETFs do not have the ability to offer significant capital appreciation, given the tendency for these funds to be broadly diversified and tilted towards the “safer” side of the risk spectrum. But for traditional buy-and-hold investors, these investments can certainly pay off without adding too much risk to your portfolio.
In this piece, we highlight five so-called hidden gems of the “plain vanilla” ETF space––all of which have posted triple-digit returns over the trailing five-year period (as of June 20, 2014).
Guggenheim S&P Pure Value ETF (RPV)
Over the trailing five-year period, the Guggenheim’s Pure Value ETF has gained over 240%. In the last three years, the fund is up nearly 90%.
Unlike traditional style ETFs, RPV seeks to remove the overlap between growth and value by identifying only those companies with the strongest value characteristics. Given the strict criteria, RPV’s portfolio holds only 120 individual securities, the majority of which are large- and mid-cap stocks.
The fund’s expense ratio is 0.35 percent.
Guggenheim S&P Pure Growth ETF (RPG)
The S&P Pure Growth ETF (RPG) also seeks to remove the overlap between growth and value stocks. A look at the two funds’ track record certainly gives credit to the “pure methodology.” Over the trailing five-year period, RPG has gained nearly 198%, and over the last three years, the fund is up nearly 75%.
Like RPV, RPG also has a relatively small portfolio of about 110 individual holdings. The fund gives meaningful allocations to a wide array of sectors, though consumer cyclical, technology, healthcare, and financial services equities receive the largest allocations.
And like RPV, this fund sports an expense ratio of 0.35 percent.
WisdomTree S&P MidCap Earnings Fund (EZM)
This WisdomTree fund seeks to measure the performance of earnings-generating companies within the mid-capitalization segment of the U.S. equity market. Unlike traditional cap-weighted funds, EZM selects only those mid-cap companies that have generated positive cumulative earnings over their most recent four fiscal quarters.