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Should You Play Market Zest with These Momentum ETFs?
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Finally, global equities snapped the protracted downing trend and got back its vivacity on November 7, following FBI’s decision of not to reopen probe into Hillary Clinton's emails citing no record of misconduct. The S&P 500 and Nasdaq Composite jumped 2.2% while Dow Jones Industrial Average added about 2.1%. U.S. dollar ETF PowerShares DB US Dollar Bullish ETF (UUP - Free Report) was up over 0.8% (read: Clinton Gets Past FBI Investigation: ETFs in Focus).
Not only the domestic bourses, the enthusiasm was noticed even across the pond with European stocks snapping the 11-day stretch of no gains. Europe ETF Vanguard FTSE Europe ETF (VGK - Free Report) advanced about 1.6% and emerging market ETF iShares MSCI Emerging Markets (EEM - Free Report) shot up over 3.6%.
All-world ETF iShares MSCI ACWI (ACWI - Free Report) gained over 2%, Asia ETF iShares Asia 50AIA notched about 2.5% higher and currency-hedged Japan ETF WisdomTree Japan Hedged Equity (DXJ - Free Report) tacked on 2.6% gains. And the most important iShares MSCI Mexico Capped (EWW - Free Report) – which is viewed as negative for Trump presidency – jumped over 5.1%.
On the other hand, safe-haven assets like SPDR Gold Shares (GLD - Free Report) retreated 1.8%, long-term U.S. Treasury iShares 20+ Year Treasury Bond (TLT - Free Report) was down over 0.7% and CurrencyShares Japanese Yen ETF (FXY - Free Report) lost over 1.4% on November 7. Needless to say, the buoyancy in the market oozed blood out of volatility-measuring products and iPath S&P 500 VIX ST Futures ETN (VXX - Free Report) plunged over 12.5%.
Why Are Stocks Soaring?
With the FBI issue – one of the biggest obstacles in Clinton’s way to the White House – being resolved, the market has started to price in the democratic candidate’s victory as she is viewed as pro-risk. The final Reuters/Ipsos States of the Nation project says that Clinton has 90% higher chances of winning at the eleventh hour.
As per a source, “during the most recent 15 years during which Republicans have held the presidency, the value of the Dow has increased by 42%. During the Democratic presidencies, it has increased by 609% — 14.5 times faster.”
Since 1900, the annualized return of the Dow Jones Industrial Average Index was 7% in Democratic rule and 3% in Republican rule. It means that Democrats are good for stocks and Republicans are less beneficial for the risky market.
How About Momentum Plays?
While these polling predictions only give you a rough idea of whom most Americans are going to cast their votes for, investors should note that anything could happen anytime. Plus, things may remain rocky as long as market watchers are not sure of Clinton’s economic policies (if she at all wins) and their impact on the global economy. Added to this, global factors like the OPEC deal uncertainty, Brexit and global growth concerns are there to derail market momentum (read: 7 Inverse ETFs to Play Election Uncertainty).
Still, investors who believe that the trend is their friend, may find momentum investing intriguing. It is a lucrative idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks that are sizzling on the market. With global markets remaining soft for about the last 10 days or so, the likely Clinton victory may usher in astounding gains in the coming days.
Below we highlight four momentum ETFs which may find a place in investors’ wish list.
iShares MSCI USA Momentum Factor ETF (MTUM - Free Report) – Up 2% on November 7, 2016
This ETF seeks to track the performance of large- and mid-cap U.S. stocks exhibiting relatively higher momentum characteristics.
First Trust Dorsey Wright Focus 5 ETF(FV - Free Report) – Up 1.89% on November 7
This ETF hovers around technical indicators such as relative strength. The fund is designed to indentify the five First Trust sector and industry-based ETFs that are arguably expected to have the maximum chance of outperforming the other ETFs in the selection universe. Securities with high relative strength scores (strong momentum) are given more weight.
PowerShares DWA Tactical Sector Rotation Portfolio ETFDWTR – Up 2.45% on November 7
The underlying index of the fund looks to give exposure to the strongest relative strength sectors in the U.S. through the universe of nine PowerShares DWA sector Momentum ETFs.
Cambria Global Momentum ETF GMOM – Up 1.75% on November 7
Since the entire global market bounced back on November 7, a look at the global momentum ETF seems warranted. This active ETF seeks to preserve and enhance capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, irrespective of market condition (read: International Treasury ETFs: Winners Amid Gloom).
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Should You Play Market Zest with These Momentum ETFs?
Finally, global equities snapped the protracted downing trend and got back its vivacity on November 7, following FBI’s decision of not to reopen probe into Hillary Clinton's emails citing no record of misconduct. The S&P 500 and Nasdaq Composite jumped 2.2% while Dow Jones Industrial Average added about 2.1%. U.S. dollar ETF PowerShares DB US Dollar Bullish ETF (UUP - Free Report) was up over 0.8% (read: Clinton Gets Past FBI Investigation: ETFs in Focus).
Not only the domestic bourses, the enthusiasm was noticed even across the pond with European stocks snapping the 11-day stretch of no gains. Europe ETF Vanguard FTSE Europe ETF (VGK - Free Report) advanced about 1.6% and emerging market ETF iShares MSCI Emerging Markets (EEM - Free Report) shot up over 3.6%.
All-world ETF iShares MSCI ACWI (ACWI - Free Report) gained over 2%, Asia ETF iShares Asia 50 AIA notched about 2.5% higher and currency-hedged Japan ETF WisdomTree Japan Hedged Equity (DXJ - Free Report) tacked on 2.6% gains. And the most important iShares MSCI Mexico Capped (EWW - Free Report) – which is viewed as negative for Trump presidency – jumped over 5.1%.
On the other hand, safe-haven assets like SPDR Gold Shares (GLD - Free Report) retreated 1.8%, long-term U.S. Treasury iShares 20+ Year Treasury Bond (TLT - Free Report) was down over 0.7% and CurrencyShares Japanese Yen ETF (FXY - Free Report) lost over 1.4% on November 7. Needless to say, the buoyancy in the market oozed blood out of volatility-measuring products and iPath S&P 500 VIX ST Futures ETN (VXX - Free Report) plunged over 12.5%.
Why Are Stocks Soaring?
With the FBI issue – one of the biggest obstacles in Clinton’s way to the White House – being resolved, the market has started to price in the democratic candidate’s victory as she is viewed as pro-risk. The final Reuters/Ipsos States of the Nation project says that Clinton has 90% higher chances of winning at the eleventh hour.
As per a source, “during the most recent 15 years during which Republicans have held the presidency, the value of the Dow has increased by 42%. During the Democratic presidencies, it has increased by 609% — 14.5 times faster.”
Since 1900, the annualized return of the Dow Jones Industrial Average Index was 7% in Democratic rule and 3% in Republican rule. It means that Democrats are good for stocks and Republicans are less beneficial for the risky market.
How About Momentum Plays?
While these polling predictions only give you a rough idea of whom most Americans are going to cast their votes for, investors should note that anything could happen anytime. Plus, things may remain rocky as long as market watchers are not sure of Clinton’s economic policies (if she at all wins) and their impact on the global economy. Added to this, global factors like the OPEC deal uncertainty, Brexit and global growth concerns are there to derail market momentum (read: 7 Inverse ETFs to Play Election Uncertainty).
Still, investors who believe that the trend is their friend, may find momentum investing intriguing. It is a lucrative idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks that are sizzling on the market. With global markets remaining soft for about the last 10 days or so, the likely Clinton victory may usher in astounding gains in the coming days.
Below we highlight four momentum ETFs which may find a place in investors’ wish list.
iShares MSCI USA Momentum Factor ETF (MTUM - Free Report) – Up 2% on November 7, 2016
This ETF seeks to track the performance of large- and mid-cap U.S. stocks exhibiting relatively higher momentum characteristics.
First Trust Dorsey Wright Focus 5 ETF(FV - Free Report) – Up 1.89% on November 7
This ETF hovers around technical indicators such as relative strength. The fund is designed to indentify the five First Trust sector and industry-based ETFs that are arguably expected to have the maximum chance of outperforming the other ETFs in the selection universe. Securities with high relative strength scores (strong momentum) are given more weight.
PowerShares DWA Tactical Sector Rotation Portfolio ETFDWTR – Up 2.45% on November 7
The underlying index of the fund looks to give exposure to the strongest relative strength sectors in the U.S. through the universe of nine PowerShares DWA sector Momentum ETFs.
Cambria Global Momentum ETF GMOM – Up 1.75% on November 7
Since the entire global market bounced back on November 7, a look at the global momentum ETF seems warranted. This active ETF seeks to preserve and enhance capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, irrespective of market condition (read: International Treasury ETFs: Winners Amid Gloom).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>