Markets reached record highs in late July, but volatility lingered. Trade tensions, speculative surges and a cautious Federal Reserve kept investor enthusiasm in check. For investors seeking stability with a dose of growth, Cabot Wealth Management highlights three of the best ETFs for today's market.
"I wanted to recommend some diversifiers, because a lot of market-cap-weighted, index-following ETFs are really heavy in Big Tech," Cabot's chief investment officer, Craig Goryl, told IBD. "For example, those that follow the S&P 500 have about one-third of their weight in the Magnificent Seven stocks. Those are great companies, but that is a high level of concentration for a small group of stocks that tend to move together."
The Salem, Mass.-based investment firm has been managing assets for over 40 years, focusing on high-net-worth individuals and small institutions. Founded by Rob Lutts, it currently oversees $1 billion in assets. With eight partners at the helm, the firm aims to remain independent.
"I think it's really important, because a lot of firms are like us and firms our size have been gobbled up by big groups," he explained. "Private equity is making a lot of acquisitions in this space. I think both our clients and our employees take comfort in knowing that we are going to stay independent."
Cabot Looks For The Best ETFs
Cabot provides financial planning, tax support and investment management. Stocks and bonds comprise about 70% of client portfolios. The firm does its own in-house research on individual securities. The remaining 30% is invested in funds, mainly lower-cost ETFs.
"Our general philosophy with investing is not to predict, but rather to prepare," said Goryl. "We don't pretend to know better than the market what surprises the economy, the market, or interest rates have in store."
As a result, Cabot positions portfolios for a wide range of outcomes. Those include investments that can be held through full market cycles. "We think that is the best way of avoiding the extremes of greed and fear," he said.
Goryl has 25 years of experience in investment management. He spent 14 of those at Cabot, where he began as an analyst before becoming partner and CIO.
Best ETFs Have A Moat
His first ETF pick is VanEck Morningstar Wide Moat. The $13 billion ETF invests in high-quality U.S. companies with sustainable competitive advantages, typically trading at attractive valuations.
"I don't place big bets on the direction of the economy or the market," said Goryl. "I'm trying to find good companies we can hold for a long time — ones that can compound earnings. This ETF fits that philosophy. It's built to hold through good times and bad. I think that's the appeal of a wide moat."
MOAT holds 54 stocks, generally smaller than the megacap tech firms. Each holding has a maximum weight of 3%.
Top holdings include Estee Lauder, Huntington Ingalls Industries and Boeing. It also holds Google parent Alphabet, Monolithic Power Systems and Nike. It is up 6.7% this year and charges an annual management fee of 0.47%.
Go Abroad For Best ETFs
Goryl's second pick offers global diversification through foreign stocks. SPDR MSCI Emerging Markets Strategic Factors is a smaller fund with $40 million in assets. But it comes from ETF pioneer State Street Global Advisors, recently rebranded as State Street Investment Management.
"Foreign stocks have outperformed U.S. ones this year, due in part to U.S. policy uncertainty," said Goryl. "But emerging markets can be a difficult place to invest. This ETF leans toward quality attributes: profitability, stable growth, lower stock volatility and low debt."
QEMM holds over 800 stocks, such as Taiwan Semiconductor Manufacturing, Samsung Electronics and Tata Consultancy Services. It's up 14.2% year to date, with an annual fee of just 0.3%.
Goryl says the fund's investment strategy helps "to avoid the pitfalls of bad businesses, of which there are many in the developing world."
Banking On Bonds
His third pick is JHancock Mortgage-Backed Securities. The $143 million fund is an actively managed bond ETF with a focus on mortgage debt. Half of the fund invests in agency mortgages, which offer very high credit quality.
"That's something that we feel is very important right now," said Goryl. "Credit spreads are very narrow, which means you're not getting paid very much for lending to riskier borrowers. Our fixed-income portfolios are positioned for high credit quality."
The other half of JHMB invests in non-agency mortgage securities, which are also actively selected.
"That's a really inefficient part of the market," Goryl said. "That's where skilled active managers can capitalize on inefficiencies in a complex segment of the bond market."
JHMB offers a 4.9% SEC yield, is up 2.9% in 2025 and charges a fee of 0.39%. Goryl said the fund's combination of yield and high credit quality makes it a strong complement to core bond allocations.
"This is consistent with our individual bonds portfolios," he said. "We are being selective about credit risk today because the market offers little additional yield to take that risk."
Craig Goryl
- Cabot Wealth Management
- Chief investment officer
- The rising concentration of giant tech stocks, such as the Magnificent Seven, in the broad stock indexes is a call for investors to further diversify their portfolios, Goryl says.
