Weekly Wrap: Bitcoin News, Inflation Protection, and HSA Tips
We recap the week on Morningstar.com and note the most popular stocks, funds, and exchange-traded funds.
Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.
The first bitcoin exchange-traded fund is now trading in the United States--sort of. I say "sort of" because, as Morningstar's director of global ETF research Ben Johnson pointed out in a conversation earlier this week, the fund--ProShares Bitcoin Strategy ETF BITO--doesn't invest in bitcoin directly; it invests in bitcoin futures. Evidently, the SEC is OK with funds investing in bitcoin futures, because the futures market is regulated. Bitcoin, of course, isn't. But despite the fact that this ETF doesn't actually own any bitcoin and, according to Ben, may very well underperform bitcoin because of the way the futures market works, investors were breathless about the offering: The ETF enjoyed near-record trading volume by first-day ETF standards. At Morningstar, we're not keen on this hot new ETF as an investment idea, for many reasons. One of the biggest reasons: Funds that invest in emerging trends (such as bitcoin) typically don't generate high-enough returns for investors to compensate for their risks. For proof, I turn to my colleague Amy Arnott's annual investor returns study, which finds that investors are more likely to buy and sell narrowly focused funds at the wrong time and therefore sabotage their actual take-home returns. That being said, some investors like taking fliers--hopefully at the fringes of their portfolios with mad money that they can afford to lose. If that's you, we suggest looking for fliers where you have some margin of safety and therefore less downside risk. One such place: out-of-favor pockets of the market. We spotlighted three such pockets this week in 3 Investing Ideas for Contrarians. Or, if you'd rather invest in ideas that have some momentum behind them, at least target those investments that are still undervalued, like these energy stocks or these banking names.
How to Protect Your Portfolio From Inflation They have varying levels of effectiveness, but here are some ways to hedge inflation risk. The Case For (and Against) Bitcoin as Digital Gold Despite some surface similarities, the two assets are fundamentally different. 3 Investing Ideas for Contrarians Those with the right constitution may find opportunity in these pockets of the market. 4 Charts on BITO's First Day The first bitcoin ETF launch lived up to the hype, even as investors are urged to be cautious. ABCs of HSA We cover the basics of health savings accounts. What Is Greenwashing, and Answers to Your Other Questions Sometimes it's an exaggeration of ESG intentions, but greenwashing can also stem from different definitions of sustainability.
Portfolio Planning and Personal Finance With Christine Benz
Without the Backdoor, Aftertax IRA Contributions Don't Add Up Better tax treatment, low yields argue for using a taxable account instead. Should Spouses Obtain Separate Healthcare Insurance? With more employers levying spousal surcharges, obtaining coverage on a single plan isn't necessarily the most cost-effective for dual-earning couples.
Mutual Funds and Exchange-Traded Funds
The 5 Best Health Savings Accounts for Spenders These HSAs earn our top spending account rankings this year. What to Consider When Buying a Dividend Stock Fund They are attractive, but investors should pay heed to more than yield. The Best Health Savings Account for Investors This HSA earns the top spot for those who want to use their accounts as investment vehicles. These Aren't the Bitcoin ETFs You're Looking For These new exchange-traded funds will invest in bitcoin futures, not bitcoin itself. What's Going on With Municipal-Bond Funds? High-yield muni funds are leading the pack. Here are some of our favorites. High-Yield Bonds Are Well-Suited for Active Management Here's why. Tax Changes Coming to ETFs? A horrible idea, says Morningstar's Ben Johnson.
AIG Is on the Right Path The market doesn't appreciate the insurer's improvement, and we think the shares are cheap. Energy Stocks Surged, Yet Still Undervalued Supply and demand imbalances have pushed oil and natural gas prices higher. Although energy stock prices have jumped, we still see value for long-term investors. WeWork Goes Public as Profitability Questions Remain The SPAC deal is done, but investor enthusiasm seems to have cooled after the wait.
Stock Analyst Updates
Charles Schwab Reports Record Third-Quarter Net Income Asset-related fees climbed while expenses remained well managed. We don't anticipate a change to our fair value estimate. J&J Posts Gains in Q3, Despite the Delta Resurgence The company's overall operations are trending back toward normalization. P&G Wisely Revs Up Brand Spend Despite Cost Pressures This wide-moat company served up a solid start to the fiscal year. Netflix Beats Low Subscriber Guidance We are maintaining our narrow moat and raising our fair value estimate to account for slightly stronger margin expansion expectations due to lower marketing costs. Verizon Continues to Build Momentum We plan on increasing our fair value estimate and shares are starting to look attractive. IBM's Q3 Disappoints With Weak Software Sales Despite significant market demand for digital transformation tech and services, IBM's third-quarter results didn't live up to our expectations, even when omitting its poor-performing Kyndryl business to be spun off soon. Raising Our Tesla FVE on Improved Near-Term Outlook We currently view the automaker's shares as overvalued. Content and Network Investments Ramp Up for AT&T We believe shares are attractive for the narrow-moat company.
Is Vanguard Truly a High-Cost Provider? The latest lawsuit against 401(k) plans. A Guide to the Best (and Worst) Investors' Ideas Viewing stocks through Morningstar's Ownership Lens.
Your 2022 Medicare Fall Enrollment Checklist How to effectively and efficiently re-evaluate your prescription drug or Medicare Advantage coverage.
The Long View Podcast
Zachary Karabell: Brown Brothers Harriman Is the Story of American Capitalism Author Zachary Karabell discusses the firm's evolution and what made it different from many of its Wall Street counterparts.
How Did Large-Cap Sustainable Stock Funds Perform in Q3? Stock-pickers led the way, particularly high-conviction funds.
How the SEC Can Make Relationship Summaries Useful for Investors Focused enforcement and small changes to the Instructions could go a long way toward empowering investors.
Are Supply Chain Woes Abating? Dhananjay Phadnis, a Fidelity portfolio manager who focuses on Asian equities, discusses what he's seeing on the ground. U.S. Fund Flows Cool Down in September Investors press pause as markets turn south.
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