I wish to invest passively, using dollar-cost averaging, in my local stock market, whose market-cap index is composed of only 17 companies. Since the only ETF available has a very high management fee (1.85%), I'm thinking direct indexing is the way to go.
However, there are a few hurdles:
- I can't buy fractional shares (there is no broker which allows it afaik)
- in order to minimize the broker commissions, the minimum trade is around 1/4 of my monthly allocated sum; so I can do a maximum of 4 trades a month
- also because of commissions, only 9 of the 17 companies make it above the minimum trade threshold; fortunately, they cover 90% of the index
Should I use a certain strategy when choosing what companies to buy in a month, or just randomly pick 4 every month and go with that?
I've considered the following filters so far:
- avoid buying a company in the period close to the ex-dividend date, because the price falls abruptly after that (sometimes more than the dividend)
- avoid buying if the price falls below a long-term moving average (like 200 days)
What strategy would you use?