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Grab These ETFs Now for an Impressive Finish to 2020

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November stood out as a strong month for Wall Street. The Dow Jones Industrial Average rose 11.8% in November, its best one-month performance since January 1987. The other broader indices S&P 500 and Nasdaq Composite also rallied 10.8% and 11.8%, respectively, delivering their strongest monthly advances since April.

Last month was marked by back-to-back releases of positive coronavirus vaccine news amid the aggravating coronavirus outbreak. Moreover, election results that showed chances of a divided Congress eased worries regarding major policy changes in the near term and largely drove the relief rally in U.S. equities.

Upbeat Outlook for December

Analysts seem to be upbeat about the final year of the pandemic-hit 2020. According to Tom Lee of Fundstrat Global Advisors, “December looks like it will be a very strong finish for 2020,” as mentioned in a CNBC article. Lee has also presented some data that substantiate the fact that when the S&P 500 gains more than 10% through November for the year during bull markets, it always increases those gains in December, per a CNBC article. He added that the data “confirms our view that strong markets finish strong.”

Ally Invest’s Lindsey Bell also believes that the current investing environment is favorable for December gains and said that “we’re positive that it will be a good end to 2020,” as told to CNBC’s “Trading Nation” on Wednesday. However, Bell believes that the gains may be less than the historical average. In this regard, she said that “December is usually the third-best month of the stock market. You usually see the S&P 500 up about 1.5%. That might be a little more muted this year,” as stated in a CNBC article.

Bell believes that another round of fiscal stimulus might act as a near-term catalyst for U.S. equities along with support from resilient consumer spending, per the article mentioned above.

ETFs for an Impressive Finish to 2020

Here we highlight some ETFs that can help investors make the most of the favorable investing opportunities amid the coronavirus crisis:

iShares MSCI USA Momentum Factor ETF (MTUM - Free Report)

While the broader stock market is expected to gain on optimism surrounding the rebounding U.S. economy and positive developments in coronavirus vaccine research, momentum investing will likely take centerstage as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months.

The fund provides exposure to large- and mid-cap U.S. stocks exhibiting relatively higher price momentum and tracks the MSCI USA Momentum SR Variant Index. The fund has an expense ratio of 0.15% (read: After a Historic November, What Awaits ETFs in December?).

Vanguard Value ETF (VTV - Free Report)

Value stocks seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with growth and blend counterparts. The introduction of a coronavirus vaccine will help combat the pandemic, supporting the economy recovery and boosting consumer spending and thus, lifting value stocks. Moreover, value securities have had a tough time this year as slow growth and lower yields prompted investors’ shift to fast-growing stocks, especially the technology sector. As such, value stocks are cheaper than the growth ones at the current valuation.

The fund seeks to track the performance of the CRSP US Large Cap Value Index that measures the investment return of large-capitalization value stocks. It has an expense ratio of 0.04%.

Schwab U.S. Small-Cap ETF (SCHA - Free Report)

Small-caps stocks, as indicated by the Russell 2000 Index, have been outperforming the broader market and hitting new all-time highs. This upside is being largely led by small-cap companies that are closely tied to the U.S. economy and thus well-positioned to outperform when the economy improves. These stocks generally outperform on improving U.S. economy. The latest release of economic data is also indicating toward an improving economy.

The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index. It has an expense ratio of 0.04% (read: 4 Reasons to Bet on Small-Cap ETFs Now).

SPDR S&P Regional Banking ETF (KRE - Free Report)

The banking industry suffered heavy blows from the coronavirus outbreak. However, the ramp-up in economic activities can offset this downside for the banking sector. Also, with support from the central bank and hopes of further stimulus from the Congress, banks are expected to fare well in the near term. Meanwhile, the industrials and financials sectors witnessed their best month since April 2009, while the energy sector saw its second-best month ever in November’s historic rally.

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Regional Banks Select Industry Index. It has an expense ratio of 0.35% (read: Rising Rates in the Cards? ETFs to Play).

The Energy Select Sector SPDR Fund (XLE - Free Report)

The coronavirus pandemic has dealt a heavy blow to the energy sector. Dented global energy demand and oversupply have also been hurting the sector for long. The outbreak has forced operators to cut costs significantly by suspending some of their major activities as well as trimming workforce.

The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index. It has an expense ratio of 0.13%.

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