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The most popular trading adage “Sell in May and Go Away” is strongly being felt in the U.S. stock market. While the summer months have been historically weak for U.S. equities, this time, concerns over a Brexit have hammered the stock market. Additionally, uneven domestic growth, weak corporate earnings, uncertain Fed policy, sluggishness in emerging markets and global growth fears have added to the woes (read: Don't Fear Market Woes: Profit from These ETFs).
However, a series of weekend polls suggest that chances of Britain remaining in the European Union have increased ahead of the referendum on U.K.’s membership in the European Union (EU) to be held on June 23. This brought back the lost confidence in the market during Monday’s trading session, fueling a rally in the stocks. As a result, the S&P 500 index touched the key threshold level of 2,100 once gain in early session before retreating. At the close of the day, the S&P 500 was about 2% below its all-time high of 2,134.72.
Further, the Fed kept the short-term interest rates steady in its latest meeting and hinted that it is not in a hurry to raise interest rates anytime soon but will follow the path of gradual rate hikes later this year. This has given an additional boost to the stock market (read: Red-Hot Income ETFs Post Fed Meet).
All these led to smooth trading in the ETF world as well with several products hitting all-time highs in the last trading session. While there are winners in several corners of the space, we have highlighted one ETF from each corner. Any of these could be compelling choices for investors seeking safety ahead of the Brexit vote.
Volatility- iShares Edge MSCI Min Vol USA ETF (USMV - Free Report)
This is the largest and most popular ETF in the low volatility space with AUM of $13.6 billion and average daily volume of 3.8 million shares. It offers exposure to 177 U.S. stocks having lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. Expense ratio comes in at 0.15%. The fund is well spread across a number of components with each holding less than 1.6% share.
From a sector look, healthcare, financials, information technology and consumer staples occupy the top positions with a double-digit exposure each. The ETF hit a record high of $45.30 per share, representing a gain of about 8.2% in the year-to-date time frame. It has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.
This product provides exposure to 50 companies that raised dividend payments annually for at least 25 years by tracking the S&P 500 Dividend Aristocrats. Consumer staples is the top sector, accounting for one-fourth of the portfolio while industrials, healthcare and consumer discretionary round off the next three spots. The fund has $2 billion in AUM and an expense ratio of 0.35%. Volume is good as it exchanges more than 314,000 shares in hand a day on average.
Industrials - iShares U.S. Industrials ETF (IYJ - Free Report)
This product provides exposure to 212 industrial stocks by tracking the Dow Jones U.S. Industrials Index. It is heavily concentrated on the top firm – General Electric (GE - Free Report) – with 10.8% of assets while others make up for less than 4% share. The ETF is tilted toward capital goods’ companies at 58.8% while software services and transportation round off the next two spots, with double-digit exposure each. The fund has an AUM of $861.9 million and average daily volume of around 86,000 shares. Expense ratio comes in at 0.45%.
The ETF hit a fresh high of $111.80 per share, and has moved higher by about 8.2% this year. It has a Zacks Rank of 3 or ‘Hold’ rating with a Medium risk outlook.
This is the most popular telecom ETF with AUM of $1.5 billion and average daily volume of more than 160,000 shares. It tracks the MSCI US Investable Market Telecommunication Services 25/50 Index and holds 31 stocks in its basket. The top two firms – AT&T (T - Free Report) and Verizon (VZ - Free Report) – dominates the fund’s portfolio with over 22% share each while other firms hold no more than 4.5% share. About two-thirds of the portfolio is skewed toward integrated telecom services, followed by alternative carriers and wireless.
The product charges 10 bps in annual fees and hit an all-time high of $95.33 per share, representing a gain of 13.9% so far this year. VOX has a Zacks Rank of 3 with a Medium risk outlook (read: 5 Sector ETFs to Play Now).
This ETF targets domestic consumer goods stocks by tracking the Dow Jones U.S. Consumer Goods Index. It holds about 114 stocks in its basket with heavy concentration on some of the top firms. From an industrial look, about half of the portfolio is allotted to food beverage tobacco while household products, consumer durables, and autos & components round off the next three spots. The fund has amassed $784.3 million in its asset base while trades in a volume of about 89,000 shares. Expense ratio comes in at 0.45%.
The ETF has returned about 6.2% so far this year, hitting all-time high of $115.24 per share. It has a Zacks ETF Rank of 3 with a Medium risk outlook.
Utilities - First Trust Utilities AlphaDEX Fund (FXU - Free Report)
This product follows the StrataQuant Utilities Index, holding 41 securities in its basket. It is pretty spread out across each component as each security holds less than 4.3% of total assets. Electric utilities takes the largest share at 41.9%, closely followed by multi utilities (22.0%) and diversified telecommunication services (19.1%).
The fund has accumulated $1.7 billion in its asset base and trades in a solid volume of more than 1.2 million shares a day. It charges 66 bps in annual fees and has surged 17.1% in the year-to-date timeframe to hit an all-time high of $26.25 per share. It has a Zacks ETF Rank of 3 with a Medium risk outlook.
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6 ETFs Scaling New Heights Ahead of Brexit Vote
The most popular trading adage “Sell in May and Go Away” is strongly being felt in the U.S. stock market. While the summer months have been historically weak for U.S. equities, this time, concerns over a Brexit have hammered the stock market. Additionally, uneven domestic growth, weak corporate earnings, uncertain Fed policy, sluggishness in emerging markets and global growth fears have added to the woes (read: Don't Fear Market Woes: Profit from These ETFs).
However, a series of weekend polls suggest that chances of Britain remaining in the European Union have increased ahead of the referendum on U.K.’s membership in the European Union (EU) to be held on June 23. This brought back the lost confidence in the market during Monday’s trading session, fueling a rally in the stocks. As a result, the S&P 500 index touched the key threshold level of 2,100 once gain in early session before retreating. At the close of the day, the S&P 500 was about 2% below its all-time high of 2,134.72.
Further, the Fed kept the short-term interest rates steady in its latest meeting and hinted that it is not in a hurry to raise interest rates anytime soon but will follow the path of gradual rate hikes later this year. This has given an additional boost to the stock market (read: Red-Hot Income ETFs Post Fed Meet).
All these led to smooth trading in the ETF world as well with several products hitting all-time highs in the last trading session. While there are winners in several corners of the space, we have highlighted one ETF from each corner. Any of these could be compelling choices for investors seeking safety ahead of the Brexit vote.
Volatility- iShares Edge MSCI Min Vol USA ETF (USMV - Free Report)
This is the largest and most popular ETF in the low volatility space with AUM of $13.6 billion and average daily volume of 3.8 million shares. It offers exposure to 177 U.S. stocks having lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. Expense ratio comes in at 0.15%. The fund is well spread across a number of components with each holding less than 1.6% share.
From a sector look, healthcare, financials, information technology and consumer staples occupy the top positions with a double-digit exposure each. The ETF hit a record high of $45.30 per share, representing a gain of about 8.2% in the year-to-date time frame. It has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.
Dividend - ProShares S&P 500 Aristocrats ETF (NOBL - Free Report)
This product provides exposure to 50 companies that raised dividend payments annually for at least 25 years by tracking the S&P 500 Dividend Aristocrats. Consumer staples is the top sector, accounting for one-fourth of the portfolio while industrials, healthcare and consumer discretionary round off the next three spots. The fund has $2 billion in AUM and an expense ratio of 0.35%. Volume is good as it exchanges more than 314,000 shares in hand a day on average.
NOBL surged to an all-time high of $54.21 per share, having gained 9.6% so far this year. It has a Zacks ETF Rank of 2 with a Medium risk outlook (read: High Quality Dividend Stocks & ETFs for Uncertain Markets).
Industrials - iShares U.S. Industrials ETF (IYJ - Free Report)
This product provides exposure to 212 industrial stocks by tracking the Dow Jones U.S. Industrials Index. It is heavily concentrated on the top firm – General Electric (GE - Free Report) – with 10.8% of assets while others make up for less than 4% share. The ETF is tilted toward capital goods’ companies at 58.8% while software services and transportation round off the next two spots, with double-digit exposure each. The fund has an AUM of $861.9 million and average daily volume of around 86,000 shares. Expense ratio comes in at 0.45%.
The ETF hit a fresh high of $111.80 per share, and has moved higher by about 8.2% this year. It has a Zacks Rank of 3 or ‘Hold’ rating with a Medium risk outlook.
Telecom - Vanguard Telecommunication Services ETF (VOX - Free Report)
This is the most popular telecom ETF with AUM of $1.5 billion and average daily volume of more than 160,000 shares. It tracks the MSCI US Investable Market Telecommunication Services 25/50 Index and holds 31 stocks in its basket. The top two firms – AT&T (T - Free Report) and Verizon (VZ - Free Report) – dominates the fund’s portfolio with over 22% share each while other firms hold no more than 4.5% share. About two-thirds of the portfolio is skewed toward integrated telecom services, followed by alternative carriers and wireless.
The product charges 10 bps in annual fees and hit an all-time high of $95.33 per share, representing a gain of 13.9% so far this year. VOX has a Zacks Rank of 3 with a Medium risk outlook (read: 5 Sector ETFs to Play Now).
Consumer Staples - iShares U.S. Consumer Goods ETF (IYK - Free Report)
This ETF targets domestic consumer goods stocks by tracking the Dow Jones U.S. Consumer Goods Index. It holds about 114 stocks in its basket with heavy concentration on some of the top firms. From an industrial look, about half of the portfolio is allotted to food beverage tobacco while household products, consumer durables, and autos & components round off the next three spots. The fund has amassed $784.3 million in its asset base while trades in a volume of about 89,000 shares. Expense ratio comes in at 0.45%.
The ETF has returned about 6.2% so far this year, hitting all-time high of $115.24 per share. It has a Zacks ETF Rank of 3 with a Medium risk outlook.
Utilities - First Trust Utilities AlphaDEX Fund (FXU - Free Report)
This product follows the StrataQuant Utilities Index, holding 41 securities in its basket. It is pretty spread out across each component as each security holds less than 4.3% of total assets. Electric utilities takes the largest share at 41.9%, closely followed by multi utilities (22.0%) and diversified telecommunication services (19.1%).
The fund has accumulated $1.7 billion in its asset base and trades in a solid volume of more than 1.2 million shares a day. It charges 66 bps in annual fees and has surged 17.1% in the year-to-date timeframe to hit an all-time high of $26.25 per share. It has a Zacks ETF Rank of 3 with a Medium risk outlook.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>