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Here's Why Quality ETFs Are Looking Attractive Now
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The United States continues to struggle with controlling the coronavirus outbreak. According to Johns Hopkins University data, the country recorded 224,258 new coronavirus cases and 3,848 more deaths on Jan 13, per a CNN report.
The pandemic-related death toll looks very disappointing. A CNN report states that more than 38,000 people have died of coronavirus infection in the first two weeks of 2021 in the United States. Going by the same report, an ensemble forecast published by the Centers for Disease Control and Prevention predicts that another 92,000 people will die from the coronavirus infection over the next three weeks approximately. Further worsening the situation, the surging number of hospitalizations is cramping up medical facilities.
Meanwhile, the inoculation process among people has kicked off, but is being carried out at a slightly slower pace which looks a little worrisome. WHO’s chief scientist Dr. Soumya Swaminathan has cautioned that herd immunity will not be attained in 2021 despite the ongoing inoculation process, and social-distancing measures will need to be adhered, per a CNN report.
In the meantime, the ongoing political turmoil in Washington following violence at Capitol Hill has kept investors a little on edge. However, the introduction of the much-awaited fresh round of stimulus and the Fed’s continuous support to keep interest rates low have added to investors’ hope for a faster economic recovery in the United States. According to a CNBC article, Fed Vice Chairman has said that the central bank will not increase rates until inflation reaches 2%. Moreover, investors are keenly eyeing a bigger stimulus package after President-elect Joe Biden takes over the administration.
Commenting on the current market sentiment, Brian Price, head of investment management at the Commonwealth Financial Network has said that “normally, we would expect risk assets to pull back during an event like this, but the market seems more focused on the next administration at this point,” per a CNBC article.
Quality ETFs Worth Your Attention
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or rising sales and earnings growth. In comparison to the plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Given that, we have highlighted five ETFs targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market scenario.
This fund provides exposure to large- and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index (read: An ETF Retirement Portfolio for 2021).
This fund tracks the S&P 500 Quality Index, a benchmark of S&P 500 stocks that have the highest-quality score based on three fundamental measures — return on equity, accruals ratio and financial leverage ratio (read: 5 Best ETF Investing Ideas for 2021).
Expense Ratio: 0.15%
AUM: $2.45 billion
FlexShares Quality Dividend Index Fund (QDF - Free Report)
This ETF seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend Index.
This fund offers exposure to stocks that have a combination of value, low volatility and quality factor strategies. This is done by tracking the MSCI USA Factor Mix A-Series Index.
Image: Bigstock
Here's Why Quality ETFs Are Looking Attractive Now
The United States continues to struggle with controlling the coronavirus outbreak. According to Johns Hopkins University data, the country recorded 224,258 new coronavirus cases and 3,848 more deaths on Jan 13, per a CNN report.
The pandemic-related death toll looks very disappointing. A CNN report states that more than 38,000 people have died of coronavirus infection in the first two weeks of 2021 in the United States. Going by the same report, an ensemble forecast published by the Centers for Disease Control and Prevention predicts that another 92,000 people will die from the coronavirus infection over the next three weeks approximately. Further worsening the situation, the surging number of hospitalizations is cramping up medical facilities.
Meanwhile, the inoculation process among people has kicked off, but is being carried out at a slightly slower pace which looks a little worrisome. WHO’s chief scientist Dr. Soumya Swaminathan has cautioned that herd immunity will not be attained in 2021 despite the ongoing inoculation process, and social-distancing measures will need to be adhered, per a CNN report.
In the meantime, the ongoing political turmoil in Washington following violence at Capitol Hill has kept investors a little on edge. However, the introduction of the much-awaited fresh round of stimulus and the Fed’s continuous support to keep interest rates low have added to investors’ hope for a faster economic recovery in the United States. According to a CNBC article, Fed Vice Chairman has said that the central bank will not increase rates until inflation reaches 2%. Moreover, investors are keenly eyeing a bigger stimulus package after President-elect Joe Biden takes over the administration.
Commenting on the current market sentiment, Brian Price, head of investment management at the Commonwealth Financial Network has said that “normally, we would expect risk assets to pull back during an event like this, but the market seems more focused on the next administration at this point,” per a CNBC article.
Quality ETFs Worth Your Attention
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or rising sales and earnings growth. In comparison to the plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Given that, we have highlighted five ETFs targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market scenario.
iShares MSCI USA Quality Factor ETF (QUAL - Free Report)
This fund provides exposure to large- and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index (read: An ETF Retirement Portfolio for 2021).
Expense Ratio: 0.15%
AUM: $21.67 billion
Invesco S&P 500 Quality ETF (SPHQ - Free Report)
This fund tracks the S&P 500 Quality Index, a benchmark of S&P 500 stocks that have the highest-quality score based on three fundamental measures — return on equity, accruals ratio and financial leverage ratio (read: 5 Best ETF Investing Ideas for 2021).
Expense Ratio: 0.15%
AUM: $2.45 billion
FlexShares Quality Dividend Index Fund (QDF - Free Report)
This ETF seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend Index.
Expense Ratio: 0.37%
AUM: $1.45 billion
SPDR MSCI USA StrategicFactors ETF (QUS - Free Report)
This fund offers exposure to stocks that have a combination of value, low volatility and quality factor strategies. This is done by tracking the MSCI USA Factor Mix A-Series Index.
Expense Ratio: 0.15%
AUM: $844.6 million
Barron's 400 ETF (BFOR - Free Report)
This ETF seeks investment results that correspond generally, before fees and expenses, to the performance of the Barron's 400 Index.
Expense Ratio: 0.65%
AUM: $131.4 million
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