By Jeff Reeves, MarketWatch
This is the best time in history to be an investor. I’m not just talking about the fact that we are in the middle the of the second-longest bull market in history. (I say “the middle” because the prior record was a 15-year rally that started after World War II, and at roughly nine years in I see no sign of the stock market slowing down.)
The profits from rising stocks are nice, but even better are all the innovations that have allowed cheaper and easier access to capital markets. Deregulation in the 1970s led to the creation of discount brokers. Innovation in the 1980s fueled electronic trading platforms such as eTrade Financial /zigman2/quotes/205731930/composite ETFC +0.38% . The 1990s saw the first exchange-traded funds that tracked the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.27% come into their own.
The improvements have continued in this century. Platforms such as Robinhood offer commission-free trading on mobile devices, while Vanguard Group is pushing fees on many funds as close to zero as it can. To top it off, talented investors feature their best trades and advice at no cost on sites like Marketwatch.com or on social media via Stocktwits.
If you want to make money on this trend, then it’s also a great time to invest in specific companies that are profiting from this investing revolution. Here are five stocks to follow the money:
The ETF revolution is here, with roughly 5,000 exchange-traded funds globally and almost 2,000 in the U.S. But as many investors move away from individual stocks and toward ETFs, they are entering a small list of megafunds — chief among them, those in the iShares family.
This includes the top asset-gathering fund of 2017 , iShares Core S&P 500 ETF /zigman2/quotes/204263249/composite IVV +0.30% which saw more than $30 billion in inflows out of roughly $874 billion in total new money going to ETFs last year. Meanwhile, emerging-markets centered iShares Core MSCI EAFE ETF /zigman2/quotes/205252932/composite IEFA +0.33% attracted $20 billion to grab the No. 2 spot. That’s about 6% of all new ETF money going into these two iShares names last year.
The iShares universe is managed by BlackRock, Inc. /zigman2/quotes/207946232/composite BLK -1.36% so it’s no surprise that shares of this investment firm have gone sky-high lately as a result. But beyond the roughly 50% gain in BlackRock shares over the past year, long-term investors should be encouraged by the fact that BlackRock has a huge commitment to return capital to its shareholders. Dividends have soared from just 78 cents quarterly in 2009 to $2.88 at present, a roughly 270% surge across this bull-market run. As those assets stick around and BlackRock continues to reap the management fees, you can expect those dividends to grow nicely.
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The vast majority of investors are piling into a select group of rather conventional broad-market funds like those offered by iShares and Vanguard. However, there is still a highly profitable niche for issuers such as Invesco Ltd. /zigman2/quotes/200294387/composite IVZ +0.09% that provide a spicier menu of more tactical funds.
For starters, Invesco manages the popular PowerShares QQQ /zigman2/quotes/208575548/composite QQQ -0.43% that was founded in 1999 and is benchmarked to the Nasdaq 100. The ETF boasts more than $60 billion in assets thanks to a demand for a fund with bias towards big tech stocks, including Apple /zigman2/quotes/202934861/composite AAPL +1.45% and Amazon.com /zigman2/quotes/210331248/composite AMZN -0.61% .
Another example is PowerShares S&P 500 Low Volatility Portfolio /zigman2/quotes/201108430/composite SPLV +0.17% , a fund designed to smooth out the ride investors would get from a typical large-cap fund. This ETF has more than $7 billion in assets.