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Many retirees focus on ETFs that generate high cash flow and have low volatility. The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) and the Fidelity High Dividend ETF (NYSEARCA:FDVV) are two funds that come to mind.
While these types of ETFs are great for income, missing out on growth ETFs can limit your long-term returns. It’s advantageous for many retirees to set aside a small portion of their nest eggs into growth-oriented assets, and these two ETFs are some of the most promising ones in the industry.
VanEck Semiconductor ETF
The VanEck Semiconductor ETF (NASDAQ:SMH) is one of the top-performing growth funds, and it has consistently outpaced the S&P 500 over many years. It has an annualized 31.8% return over the past decade and places a strong emphasis on AI chipmakers.
It only has a 0.35% expense ratio, so you end up keeping most of the fund’s returns. The VanEck Semiconductor ETF only has 25 holdings, and almost all of them are large-cap growth stocks. Roughly 70% of its total holdings fit that distinction. SMH does not have any small-cap stocks in its portfolio.
This ETF has a 1.67 beta, making it more volatile than most funds. However, it’s not meant to deliver cash flow or provide low volatility. This ETF, like the other on this list, is meant to be a small position that can deliver outsized gains while your other funds provide enough cash distributions to keep up with most or all of your living expenses. Being retired does not mean you should take zero risks or avoid growth-oriented investments entirely.
While investors have been hearing about AI stocks nonstop for a few years, the party is still in its early innings. Grandview Research projects a 28.9% CAGR for the AI chipset market from now until 2030. Cloud computing, AI models, and physical AI like humanoid robots will all increase the demand for AI chips, which should translate into an extended rally for the VanEck Semiconductor ETF.
CoinShares Bitcoin Mining ETF
Despite its name, the CoinShares Bitcoin Mining ETF (NASDAQ:WGMI) isn’t as focused on crypto as investors think. It has essentially turned into an AI fund that focuses on smaller opportunities, while the VanEck Semiconductor ETF prioritizes AI giants.
All of its top 10 holdings, and 14 of its top 15 positions, are crypto miners that are pivoting to AI infrastructure. The lone non-crypto miner in the top 15 is Nvidia (NASDAQ:NVDA | NVDA Price Prediction), which used to generate the bulk of its revenue from crypto miners that needed effective GPUs. CoinShares allocates roughly 80% of its total capital into its top 10 positions, suggesting its future is tied more heavily to AI than crypto prices.
This fund is extremely volatile with a 5.18 beta. That means it is five times more volatile than the S&P 500. This same fund is up by more than 150% over the past year and could be a valuable addition to any retiree’s portfolio if it is a small allocation. It’s optimal to put money into an ETF like the CoinShares Bitcoin Mining ETF that you will not need for at least three years. Then, it is easier to ride the ups and downs of this fund while generating cash flow from low-volatility, high-yield picks.