MOAT, COWZ, SCHD, SPY, QQQ, BITO: SWAN portfolio for 2024

2023 was a strong year for American and some European equities. In the US, the closely-watched S&P 500, Nasdaq 100, and Dow Jones ended the year at their all-time highs. They all jumped by double-digits, in one of their best years on record. 

Similarly, in Europe, the German DAX, French CAC 40, and the broad Stoxx 50 indices also jumped to record highs. This performance happened even as the bloc went through a substantial slowdown during the year.

2024 will likely see a continuation of this rally barring a major black swan event in the market. Besides, central banks are set to start cutting rates while an election will happen in the US. Stocks tend to do well in an election year.

Therefore, I believe that investing in individual stocks is relatively riskier. As we have seen before, companies like Fisker (FSR), Mullen Automotive (MULN), and Stitch Fix (SFIX) that did well a few years ago have slumped. As such, here are the Sleep Well at Night (SWAN) ETFs I am starting the year with in 2024. 

MOAT vs COWZ vs SCHD vs QQQ vs SPY ETFs

MOAT is an ETF that invests in companies with a substantial market share in their respective industries. Its biggest constituent companies are the likes of Allegion, Marketaxesss, Equifax, and Teradyne. Each of these firms has a major market share that is difficult to disrupt.

The biggest industries in the fund are financials, health care, information technology, and industrials. MOAT rose by over 30% in 2023 and is often less correlated with the broader market. 

COWZ is a unique ETF that tracks companies with a proven track record of growing their free cash flow. I believe that FCF is one of the most important measures in a company’s records because it looks at funds that remain after doing everything. As a result, the company can increase its investments and shareholder returns.

The biggest companies in the COWZ portfolio are D.R Horton, CVS Corp, Lennar, Qualcomm, and Booking Holdings. In terms of industries, its biggest holdings are in the energy, consumer cyclical, health care, and basic materials. The MOAT ETF stock rose by 12% in 2023.

A good Sleep Well at Night (SWAN) portfolio should provide its investors with regular returns. SCHD is one of the most loved dividend ETFs in Wall Street with over $52 billion in assets. Investors love its high yield of 3.50% and its strong dividend growth.

SCHD underperformed the market in 2023 because of its concentration on financial stocks. It also has a few technology companies in its portfolio. In this case, its biggest companies are Broadcom, Home Depot, AbbVie, and Texas Instruments.

I suspect that the SCHD ETF will do well in 2024 as investors move back to value stocks and as the Fed starts cutting rates.

The other part of my SWAN portfolio is the SPY and QQQ ETFs. These funds track the biggest companies in the US. The main reason for investing in the two is that they have a long track record of generating strong shareholder returns. 

QQQ has risen by more than 374% in the past decade while SPY is up by over 160% in the same period. They also recover after major dips such as the dot com bubble, the Global Financial Crisis (GFC), and the Covid-19 pandemic. Also, with over $6 trillion of dry powder in the market, we could see more gains this year.

I believe that Bitcoin has more upside in 2024. Like QQQ and SPY, Bitcoin has survived key black swan events like the collapse of FTX and Terra. It also did well in 2023 even as interest rates jumped to the highest level in over two decades. I suspect that this year will see more institutional investors allocate capital in Bitcoin as part of their balanced portfolio.

Therefore, there is a likelihood that the coin will retest its all-time high at $67,000. In this case, I am holding BITO since it is the cheapest Bitcoin ETF for now. I will rotate from BITO to other spot ETFs if the SEC approves them.

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