With more than 65,000 stocks available around the world, it can be difficult to select the right ones for you. At Capital One, we are very selective about the types of stocks we recommend. We use a disciplined approach to find those that align with our investment philosophy and recommend you stick with quality, diversify and invest for the long term.
Quality – our dos and don’ts
Because we are committed to quality investments, we don't promote the hottest, newest stock you heard about on TV last night. Over time, we've found that most people who go down that path are disappointed. That's why you may actually hear your financial advisor say "no." There are investments we just won't sell, we believe there's too much risk.
Our take on ETFs
At Capital One, we believe you should focus on the traditional, more broadly diversified and passively managed ETFs because they are designed to provide you with exposure to multiple securities and sectors. And their performance isn’t overly dependent on how well a certain type of company performs. Because there are so many ETFs available, we can help you narrow down your choices using the following criteria:
Track record – One year of actual performance history is necessary to see how accurately an ETF tracks against its benchmark index. Your financial advisor can also help you review the benchmark itself to see how it has performed over time and whether that benchmark meets your needs. Low expenses – In general, because they are passively managed, ETFs tend to have low expenses. But we can help you compare ETF fees and give you the information needed so you can decide what's right for you.
Total Stock Returns
Companies that we believe can produce both current dividends and long-term dividend growth offer greater consistency and less volatility than lower-quality, non-dividend-paying stocks.
Resilience in Down Markets
Standard & Poor's (S&P) defines quality rankings (using a rating system of A through D, from high to low) for individual stocks. The ratings are based primarily on the consistency of a company’s earnings and dividend growth during the past 10 years.
We believe higher-quality companies (B+ and higher) usually are able to generate more consistent earnings and dividend growth. Historically, this has helped them perform better during down markets.
Before you can really understand how an exchange-traded fund (or ETF) works, you should first understand indexes. An investment index is a way to observe a big cross-section of stocks or bonds. For example, the Standard & Poor's 500 (better known as the S&P 500) is one of the world's best known indexes. It's the most commonly used benchmark for the overall stock market.
But because, technically, you can't actually buy an index, an ETF is one way to invest in a broad market segment or the market as a whole. That's because ETFs trade on a stock exchange and experience price changes throughout the day as they are bought and sold.