Tech, Dividend Funds to Capture Goldman’s ‘Pockets of Opportunity’

By Tom Lydon, ETF Trends

With the equities markets touching new highs, most U.S. stocks are hovering at or above fair value.

However, exchange traded fund investors can still find opportunities in technology and dividend investments.

“The valuation of the market is at the higher end of a range of fair value and it’s pretty consistent with what we’ve seen, in terms of economic data, broadly speaking, getting better,” David Kostin, chief U.S. strategist at Goldman Sachs, said in a CNBC report.

Given the outlook for everything from economic growth the the narrow dispersion of stock returns and valuations, Kostin argues that stock pickers will have a harder time singling out bets.

“Everything’s basically in a very tight cluster and that suggests again there’s less stock picking opportunities,” Kostin said. “It’s just a more challenging market.”

Alternatively, the strategist suggests that investors should look for “pockets of opportunity” through thematic investments. Specifically, equity traders should increase risk with the tech sector, “the most attractively valued part of the market,” or dividend-paying companies that have returned cash to shareholders.

******

The D2 Capital Management Multi-Asset Income Portfolio is overweight in dividend funds.  One of its holdings is First Trust NASDAQ Technology Dividend Index Fund (TDIV).  Current yield on the portfolio is 5.17% and year to date the portfolio is up 9.51% (as of 10 June 2014).

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.