Quentinvest for ETFs in Action

For £100 a year, this one’s a no-brainer for all investors – big and small

Key features of the Quentinvest system for Shares are to only buy shares in strongly growing companies, never to sell, to periodically buy more in the best performers and thereby to build and scale a high quality equity portfolio, which over time can become an asset to rival your house.

This identical strategy can equally be applied to ETFs, which are simply tradeable collections of shares.

There are two key reasons why the Quentinvest approach works as well for ETFs as it does for shares and might be a good idea for you.

First, there are literally 1,000s of ETFs available so choosing between them is surprisingly like choosing shares to buy. At Quentinvest we have the skills to select the most attractive ETFs to buy, not least by looking at the portfolios behind each ETF and using our share knowledge to evaluate the ETF.

Second, all the techniques described above, only buying the best, never selling and adding to the best performers work equally well for ETFs to produce excellent results for long-term investors.

What I have done though is tailor Quentinvest for ETFs to make it more suitable for investors who are still learning their trade. We all have to start somewhere.

Instead of sending out alerts as and when I find exciting shares, there will only be one ETF recommended a month. So, in the course of a year, obviously, if you buy all of them, you will make 12 purchases, which for many people will be a much more manageable investment.

Furthermore, since ETFs are collections of shares, diversification comes built in so within reason you can operate the strategy, with just one ETF purchase or as many as you like, ranging from buying all 12 annual selections to six, to three or whatever. The system will work equally well, whatever you do although the more you buy the faster the likely results.

Similar flexibility can be used with the follow up purchases. Once an ETF has been purchased that is just the start of the programme, with that ETF. Every quarter I will alert you to buy more if I am happy with the way the ETF is performing.

The effect of the Quentinvest for ETFs service is that you will be operating a pound-cost averaging programme focused on carefully chosen ETFs but only buying, where additional purchases are triggered by the system. If you don’t have funds, when any particular alert arrives just let that one go and wait for the next one.

Over time this should enable you to build a valuable portfolio.

Naturally shares can go up and down in the short term. It would be unusual though for shares in carefully-chosen growth-focused ETFs to keep falling indefinitely because they are collections of shares and so should have a strong long-term bias to higher levels.

All past experience, which admittedly the regulators would want me to tell you, is not a sure guide to the future, suggests that well-chosen ETFs, like the indices they are tracking, head steadily higher in the long run.

I am following Quentinvest for Alerts myself so will be making the identical investments that I am proposing to my subscribers. I would not be doing this if I did not expect to do very well.

Just as with Quentinvest for Shares I will aim to amplify my results with the judicious use of gearing via buying CFDs in an IG account. (A CFD is a share/ ETF by another name except that there is no stamp duty on purchases and you can buy on margin). If this appeals to you then I suggest you read more about working with IG and managing risk in other parts of the web site.

If borrowing to buy ETFs seems too big a step for the moment, don’t do it, just buy the ETFs and build your portfolio over time that way. You may start to feel more comfortable with the idea of CFDs as you gain more experience.

Just to wet your appetite I want to tell you about one important US index, the NASDAQ 100, which was first created in 1985. I am not making any promises about what this index is going to do in the future but it is surely encouraging that it has risen in 28 of the 33 years since 1985. Overall it is up from 107.16 to 6114,32, which is a rise of 57 times.

There is an ETF call the PowerShares QQQ Trust Series, which tracks the NASDAQ 100 index. If it had been around since 1985 it too would have risen 57-fold over that time.

Apply the Quentinvest for ETFs system to that sort of performance and the results could be exciting indeed. No guarantees; there never are in the stock market but it shows you what is possible.

All trading involves risk. Losses can exceed deposits. Quentinvest provides information only and subscribers should seek financial advice before acting on any recommendations. Past performance is not a guide to future performance.