GFM Asset Management’s Tariq Dennison

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GFM Asset Management’s Tariq Dennison

2024 was expected to be a ” stock picker’s year ,” but macroeconomic uncertainties and some market volatility have seen many investors plow cash into exchange-traded funds (ETFs). Net flows into ETFs topped $200 million in the second quarter of this year, according to Fidelity, taking the year’s total to $404 billion — 85% higher than in the first half of 2023. ETFs hold a collection of securities , like stocks or bonds, and so offer more diversification than a single asset. This gives them a wide appeal, according to wealth manager Tariq Dennison. “[Even] professional investors — including managers of some of the world’s largest funds — use ETFs as an easy button [for] diversified and easy access to different geographies and themes,” Dennison, co-founder and investment advisor at GFM Asset Management, told CNBC Pro this month. CNBC Pro asked Dennison for his top ETF picks that someone looking to invest $50,000 can buy and hold long-term. Avantis International Small Cap Value ETF Dennison says he’s “very happy” with the Avantis International Small Cap Value ETF (AVDV-US). “This is one example of an ETF that I would leave my money in and let it run for the next 100 years, if I reach a stage where I could never make any investment decisions,” he said. The fund invests in non-U.S.-listed developed small-cap companies trading at low valuations and higher profitability ratios. British retailer Marks and Spencer and Swiss bank Swissquote are among its top holdings. The ETF is up around 7.83% so far this year, according to FactSet data, compared to 5.53% gains by its benchmark MSCI World ex-U.S. Small Cap index. DFA Dimensional U.S. Small Cap Value ETF Another small-cap-focused ETF on Dennison’s radar is the Dimensional US Small Cap Value ETF (DFSV-US), which owns companies that are “in corners of the market that are ******* to reach.” The fund’s top holdings include Abercrombie & Fitch , Cadence Bank and Commercial Metals . The recommendation comes amid a renewed interest in the Russell 2000 index, which made significant gains last week before tapering off. The benchmark is now up 8.5% year-to-date. The Dimensional US Small Cap Value ETF is currently around 6% higher over the year to date. Its benchmark MSCI USA Small Cap index is 6.84% higher. JPM Global Equity Multi-Factor UCITS ETF Beyond small-caps, Dennison described the JPM Global Equity Multi-Factor UCITS ETF (JPGL-IT, JPGL-DE, JPGL-CH) as his “single, go-to ETF right now.” Names in its portfolio include Arista Networks and Walmart , along with international companies like Deutsche Telekom , ASM International and Novo Nordisk . “The nice thing about ETFs like JPGL is they tend to combine U.S. and non-U.S. exposure in a single fund, while investors often need to combine 2 or 3 U.S.-listed ETFs to get the same level of exposure,” Dennison added. The ETF has year-to-date returns of around 10%. Fixed income ETFs U.S. investors wanting exposure to fixed income should consider the Dimensional Global Core Plus Fixed Income ETF (DFGP-US), according to Dennison. He said he prefers to invest in individual bonds, but likes the ETF’s ability to “diversify across global bonds and hedge all of my exposure to a single currency throughout its target duration of around six years.” U.S.-listed bond ETFs “are great for U.S. taxpayers,” but can be unfavorable for investors elsewhere for tax reasons, he added, naming the Vanguard USD corporate bond UCITs ETF (VCPA-GB) as one he likes outside of the U.S. Year-to-date Dimensional’s ETF has returned 1.53% over the year so far, while Vanguard’s ETF has gained 2.53%. — CNBC’s Weizhen Tan, Ganesh Rao contributed reporting.

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