Passive investing has become a popular strategy among investors looking for a low-maintenance approach to growing their wealth. Rather than constantly buying and selling assets, passive investors typically invest in exchange-traded funds (ETFs) that track a particular index, allowing them to benefit from long-term market growth.
To maximize the benefits of passive investing, using a tool like TradingView’s ETF Screener can significantly streamline the process of identifying suitable funds. In this guide, we’ll show you how to use the TradingView ETF Screener for passive investing, explain its key features, and offer strategies to enhance your portfolio.
What is Passive Investing?
Before diving into the TradingView ETF Screener, it’s essential to understand the principles of passive investing. Unlike active investing, which involves regular buying and selling of stocks or other securities, passive investing focuses on long-term growth by holding assets for extended periods. Investors following this strategy frequently choose ETFs designed to mirror the performance of a broad market or specific sector, like the S&P 500.
The key benefits of passive investing include lower transaction fees, reduced market timing risk, and a more hands-off approach that requires less time and effort. It’s a method often favored by investors who believe in the market’s long-term upward trajectory.
Also Read: Some of the Best Indicators on Tradingview
Step-by-Step Guide to Using TradingView’s ETF Screener
The TradingView platform provides a powerful ETF Screener tool that allows investors to filter and select ETFs based on various metrics tailored to passive investing.
Follow these steps to make the most of it.
1. Access the ETF Screener
- To begin, log into your TradingView account and navigate to the Screener section, typically located at the bottom of the platform’s interface.
- Here, you can filter between different asset types, such as stocks, cryptocurrencies, and ETFs. Select ETF as the asset class to initiate your search for suitable funds.
2. Set Up Filter Criteria for Passive Investing
Once you’ve selected the ETF category, it’s time to apply filters based on passive investing principles.
Here are a few important metrics to keep in mind:
- Expense Ratio
One of the most important factors in passive investing is the expense ratio. It reflects the yearly cost of holding the fund, and over time, these expenses can reduce your overall returns. To enhance long-term gains, filter for ETFs with low expense ratios, preferably under 0.10%.
- Assets Under Management (AUM)
ETFs with higher AUMs tend to be more liquid and stable, making them ideal for passive investors. Choose funds with significant AUM to avoid potential liquidity issues and ensure the fund can track its underlying index efficiently.
- Index Tracking
For passive investors, it’s essential to choose ETFs that closely track broad market indices such as the S&P 500 or Total Stock Market Index. Apply filters for index tracking funds to identify ETFs that provide broad market exposure, aligning with passive investing strategies.
- Sector or Asset Class Exposure
If you’re aiming for a diversified portfolio, filter ETFs based on specific sectors or asset classes. For instance, you might want exposure to large-cap stocks, real estate, or international markets. The TradingView screener allows you to easily filter funds based on these preferences.
Also Read: Best ETF Screener Filters For Long-Term Investors
Apply Advanced Filtering Options
To further refine your ETF search, TradingView offers a set of advanced filters that can help you narrow down your options more effectively.
Historical Performance
Although passive investors aren’t as concerned with short-term gains, it’s still useful to analyze the historical performance of ETFs over longer timeframes (such as 5 or 10 years). This gives you a better understanding of how consistent the fund has been in generating returns.
Fund Flows
Fund flows can provide insight into investor sentiment. If an ETF is experiencing high inflows, it suggests growing interest and confidence in that fund. By tracking fund flows, you can assess whether an ETF is gaining traction or losing appeal among other passive investors.
Holdings Analysis
A deeper look into the holdings of an ETF can also be helpful. Understanding the specific stocks, bonds, or other securities held within the ETF allows you to see what you’re truly investing in. This can give you peace of mind, knowing the underlying assets match your passive investing goals.
Important Considerations for Passive Investors
While the TradingView ETF Screener is an excellent tool, there are some important considerations to keep in mind when using it for passive investing.
Regular Review and Rebalancing
Although passive investing demands less frequent management compared to active strategies, it’s still important to review your portfolio periodically. This ensures that your asset allocation remains in line with your investment goals and allows for rebalancing when needed. The ETF Screener is a valuable tool for identifying funds that are performing well and match your long-term objectives.
Diversification
Diversification is one of the cornerstones of passive investing. By spreading your investments across multiple ETFs that cover different sectors and asset classes, you can minimize risk while maximizing potential returns. Use TradingView’s ETF Screener to find funds that represent a variety of markets, such as domestic and international stocks, bonds, and real estate.
Cost-Effectiveness
Prioritize ETFs with low expense ratios to ensure you’re maximizing your long-term returns. The difference between an expense ratio of 0.10% and 0.50% may seem minor at first, but over the course of decades, it can have a significant impact on your overall portfolio performance.
Also Read: Use TradingView’s ETF Screener to Diversify Your Portfolio
TradingView Strategies for Passive Investors
TradingView offers several strategies for passive investors looking to enhance their approach:
- Custom Alerts: Set up alerts for ETFs when they meet specific criteria, such as crossing a threshold in historical performance or having a certain level of fund inflows.
- Comparison Tools: Use TradingView’s comparison feature to analyze multiple ETFs side-by-side, helping you make more informed decisions.
- Community Insights: TradingView’s vast community of investors often share their strategies and analysis. While passive investing doesn’t require constant monitoring, engaging with the community can provide valuable insights.
Conclusion
TradingView’s ETF Screener is a powerful tool for passive investors looking to build a diversified, cost-effective portfolio. By utilizing the screener’s various filters and strategies, you can easily identify ETFs that align with your investment goals. Remember to regularly review and rebalance your portfolio, and use TradingView’s advanced features to maximize the efficiency of your passive investing strategy.
Disclaimer
The information provided in this article is for educational purposes only and should not be construed as financial advice. Always perform your own research and consult with a licensed financial advisor before making any investment decisions. Trading and investing involve significant risk, and past performance is not indicative of future results.
