Cutting-edge technologies like blockchain, robotics, artificial intelligence (AI), machine learning (ML), and data analytics are spreading across more and more industries. These disruptions, or rather, “trends” and “themes,” have several benefits. Even large organisations like these have their priorities set for investing with specific goals. This results in a need for tailor-made baskets of stocks based on these themes.
This results in a need for tailor-made baskets of stocks based on these themes. But how does one go about investing in this way? Stacks are the answer!
Stacks build custom portfolios that contain assets tailored toward certain trends linked with their interests or aspirations. But what is stack in the stock market?
Stacks are pre-packaged bundles of stocks and ETFs that you may purchase with a single click. They are made by portfolio managers, multinational asset management firms, seasoned wealth management companies, and hedge funds.
More than two-thirds of tech IPOs were funded on the NYSE, making it the place where the most creative disruptors have been listed. With an average of 2.4 billion shares changing hands daily, the USA is a great investment destination.
U.S. stock markets have been major wealth creators among other global equities, having resisted turbulent economic times, one of them being the financial crisis in 2008.
The main indices of Wall Street — the S&P 500 (GSPC), the Dow Jones (DJI) and the Nasdaq (IXIC) — have maintained this trend over the past five years as well, more than doubling people’s investments.
5-year Returns of Major Wall Street Indices
Source: Yahoo Finance
In fact, from the turn of the century, US markets have given stellar returns to investors.
Wall Street Indices’ Returns From 2000 Till Now
Source: Yahoo Finance
On the downside, investors have also lost money by indulging in frenzied investing, trading on misinformation, and having a lack of research and analysis before buying or selling a stock. It is always prudent to pick fundamentally-sound companies, through in-depth financial research, before taking a call.
Investors can look to credible advisors to do this job because it is time-consuming and cumbersome without the right resources. Stockal’s Stacks is a robust offering that can help you keep your money in the right instruments and be a fair option to grow your wealth.
What Is Stack in Stock Market, And How does it work?
Stacks are pre-configured baskets of stocks & ETFs (exchange-traded funds) that you can invest in with a single click. These are developed by hedge funds, global asset management companies, experienced wealth management firms and portfolio managers.
The ready-made portfolio consisting of these instruments is usually based on a theme or an idea, ranging from healthcare and electric vehicles to internet technologies, capital goods and ESG (environmental, social and governance), among others.
What are the advantages of stack in the stock market?
Stacks mimic the advantages of foreign portfolio investment of reducing risk by diversification and increase returns by investing in themes. They can help in growing your wealth as their baskets are created after investing a lot of time and study. They focus on the companies’ fundamentals and their growth potential, among several other parameters, to generate a single basket of stocks and ETFs.
With Stacks, investors can easily diversify their portfolios without indulging in deep research.
The baskets are managed by experts that perform financial analysis of thousands of stocks and ETFs before arriving at a conclusion to bunch them up.
Their thematic nature helps investors bet on an ongoing or a promising trend in the market, helping them cash in on current and potential booms in those shares and ETFs. For instance, higher performance of electric-vehicles segments could boost the performance of such thematic stacks.
One of the thumb rules in any investment principle is reviewing and rebalancing your holdings to capture the market’s pulse. With Stacks, the baskets are actively and consistently rebalanced to ensure alignment with its goals and benchmarks.
Through our platform, you can invest in a variety of Stacks prepared by various financial experts and institutions. Let’s take a brief look at some of the Stacks.
US Tech Bluechip Portfolio: This basket invests in pure technology internet companies that benefit from uptrends in hardware, software, internet, OTT and Cloud — critical segments that have leading advantages in their businesses. Its top holdings include Apple (AAPL), Microsoft (MSFT), Google (GOOG) and e-commerce giants such as Amazon (AMZN).
Electric Vehicle Portfolio: This stack comprises companies involved in electric vehicles technology, autonomous vehicles, battery, EV components, and general cleantech companies that have huge growth potential. The stack’s top holdings include Tesla (TSLA), Toyota (TM), General Motors (GM), Sempra Energy (SRE) and Ameren (AEE).
The Obvious Portfolio: As the name suggests, this Stack contains the most dominant internet, media and technology firms. The likes of Facebook (FB), Amazon, Apple, Netflix (NFLX), Google and Microsoft are a part of this basket. These companies are consumer-secular and have strong businesses diversified across several sectors.
Peace of Mind ETF: Apart from just equities, Stockal Stacks also offer baskets consisting of ETFs. Its Peace of Mind ETF comprises ETFs across bond and equity markets. These provide the benefits of diversification and carry very low risk. Its top holdings include Invesco QQQ (QQQ) and Vanguard S&P 500 ETF.
Global ETF Portfolio: This stack is limited to equity index-only ETFs present across the U.S. and global equity markets. Investing in this Stack can give you diversified exposure to global markets, including U.S., European, BRICs, and emerging and frontier equity markets.
How The Numbers Stack Up
Some of the other prominent Stacks include The MultiFactor, the Findea TwinMomentum, The GlobalX Equity Income Portfolio, The Omniscience AIoT, and The Omniscience Supreme US. Here’s a look at their returns chart.
Three-Year Returns of Other Stacks on Stockal
Stacks | 3 Year Return % | Risk |
US Tech Bluechip Portfolio | 19.5 | Moderate High Risk |
The Obvious Portfolio | 19.78% | Moderate High Risk |
The Electric Vehicle Portfolio | 27.20% | Moderate High Risk |
The Global ETF Portfolio | 2% | Moderate Risk |
Peace of Mind ETFs | 15.36% | Moderate Low Risk |
Data As of 26th July 2022
How to invest in curated portfolio stacks?
- An account with Stockal
Open a Stockal account is a few simple steps by providing the necessary KYC documentation to prove your identity and address. You may easily accomplish this with any smartphone.
- Decide the timeline, goals and theme
Before making any investments, it is important to first gauge your investment timeline, which can depend on your goals. It is also important to pick a theme you wish to invest in. A theme that stands out for you and in which you have a conviction for high returns may be a great way to leverage the advantages of portfolio investment.
- Select a suitable stack based on the theme
So far, we have understood what a stack is and what are the various types of stacks offered by Stockal. After deciding upon a theme, it is important to pick a stack to invest in.
- Get going
After completing the above processes, all that is left is to invest in the stack and get going on to reap the benefits.
Summing up
Stockal helps you invest in stacks that give advantages of foreign portfolio investment. It offers you the twin benefits of geographical diversification, robust equities and ETFs while ensuring a thoroughly research-backed tool. Investing through stacks will help you grow your investment and reduce risk. Visit our website to learn more, and start investing in Stacks!
Frequently asked questions:
- How do you structure an investment portfolio?
First, decide on the best asset mix based on your risk tolerance and investing goals. The second step is to choose the assets for your portfolio. Third, monitor the diversification of your portfolio by tracking how the weightings have changed.
- What is stack in Stockal?
Stacks are pre-packaged bundles of stocks and ETFs that you may purchase with a single click. They are made by portfolio managers, multinational asset management firms, seasoned wealth management companies, and hedge funds.
- What is stacking investing?
When it comes down to it, investment stacking is the practice of starting with lower risk/lower return assets to build a solid foundation for your financial future and progressively moving some of your investment money into higher risk/higher reward investments as you gain financial knowledge.
By utilising this type of investment strategy, a novice investor may construct a foundation of lower growth assets that will last even if they encounter a personal or financial downfall.