How to research your next investment
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If you don’t work for an investment business, the most challenging aspect of investing is accessing the right information. The good news is that there are now many online resources, many of which are free, to provide you with great data and, even better, actionable ideas.
Let’s start with the fast-growing area of index-tracking exchange traded funds (ETFs). In my view the best source of information is a German website called justetf.com. If you go to its homepage and tap “ETF screener”, this allows you to search on funds according to different criteria. This will bring you the full range of ETFs in Europe and throws up data on fund size, costs and one-year return. You can then focus on one fund and dig around, say, the performance data.
Trackinsight.com also has a cool ETF screener, but with one useful additional feature: you can see the tracking error of a fund. That sounds a rather technical term but it is important. Tracking error is the difference between the fund’s return and the return from the index — and if it’s positive it means you have made more from your fund than the index.
Most ETFs have a negative error because of incurred costs but my general rule is that any expense ratio above 50 basis points (0.5 per cent) needs a damned good explanation. Any tracking error over say 75 basis points deserves special attention.
Morningstar’s screener — which also extends to unit trusts — has a useful feature giving you much more choice about the exact investment area you want to focus on — say, US dividend-focused equities.
In the land of investment trusts — actively managed listed funds — I would recommend the screener offered by the industry association, the AIC. Go to its homepage, click on research tools, then find the screener option. This uses Morningstar data and allows you to search by sector, charges, yield, market cap, gearing and, crucially, for me, discount.
A useful starter for picking the right trust is first to work out the area you want to invest in — say emerging markets — then see what funds are available, and look at their net asset value performance over one, five and 10 years. If it is consistently above the pack, look at whether it trades at a big premium or discount. If you find that a fund has consistently beaten its peers and the benchmark (such as the MSCI EM index) and it trades at a discount — preferably a big one — this is something worth analysing more closely.
One last website worth digging into for investment trusts is Doceo.tv (a company in which I have invested). It provides video updates from dozens of managers, alongside excellent articles which round up what’s been happening in the listed funds space.
The independent website QuotedData.com also has a great screener plus loads of great content — the screener is in its data section, where you can choose the subgroup of funds you want to research. Much of the written content is useful but is paid for or sponsored, but it’s still useful for context and background detail. I also like the fund and company research reports put out by a rival firm called EdisonGroup.com, which again works on a sponsorship or paid-for model. Their reports are comprehensive and useful and extend way beyond funds.
What about digging out data on individual companies and stocks? Two websites stand out — Sharepad and Stockopedia. Both provide a huge volume of data which range from detailed screeners to portfolio management. I like both (I write some content for Sharepad) and have used them in the past. Stockopedia charges £7 a month for UK data plus another £18 a month for US data, while Sharepad charges £32 a month for US and UK delayed data or £74 a month for real-time data.
The key selling point for both services is your ability to take a huge amount of fundamental data (say dividend yield or price-to-earnings ratio), crunch it down via a screen and end up with a shortlist of stocks to research.
There is also one low-cost alternative worth exploring. AuroraDIYinvesting is a European-based data platform that lets you screen stocks and funds from around the world and monitor (and gauge the risk of) your portfolio. The annual cost is $70, much cheaper than its better-known peers.
That leads me to the challenge of where to get good investing ideas. That’s where columnists like me come in, but if you’re after a vast marketplace of ideas then nothing really beats the US website SeekingAlpha, where analysts and stockpickers ply their trade. The online newsletter platform Substack has also made a big move into investing and has a score of excellent newsletters and blogs for all tastes — including my own (davidstevenson.substack.com) which is suitably adventurous (and free).
The pricing on these newsletters is fairly competitive (most are around £5 to £10 a month) and the choice is massive. For top-level macro market stuff and stock analysis I’d recommend Stephen Clapham and his BehindTheBalanceSheet site, while if you are into the energy sector Doomberg is good reading.
If the more focused world of dividend investing is your thing there’s the Hindesight Letters, whereas the Liberum strategist Joachim Klement offers a day-by-day catch-up on the latest economic and investment research (for free) at klementoninvesting.substack.com/. For a broader take on macroeconomics, geopolitics and markets, one of the best is Bloomberg columnist Noah Smith and his noahpinion.substack.com.
I have one last highly recommended website. Theideafarm.com is a US website set up by a superb US adviser Meb Faber, which pulls together the latest research from Wall Street and beyond. It’s free, world class and every week features an absolute gem. It is almost as good as the famed Ed Yardeni Research website which features a treasure trove of stock market data, including his closely watched stock market fundamentals data sets. That one is also invaluable and free. Happy reading!
David Stevenson is an active private investor. Email: firstname.lastname@example.org. Twitter: @advinvestor