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Putting Up the Tree with the Promising ETFs of 2017
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Christmas celebration is incomplete without an evergreen tree, a symbol of goodwill and love with all the shining lights and silver bells, brining joy and glee to every heart. Given its significance in this season of joy, we have built a tree with the most verdant ETFs of 2016 that could stand tall in 2017.
The base, which is the most valuable portion of the tree, with all the gifts there, is made by none other than SPDR Dow Jones Industrial Average ETF (DIA - Free Report) . The fund, tracking the Dow Jones Industrial Average, has been on a stellar ride especially after the election. As Dow Jones is within striking distance of the 20,000 level milestone, DIA has garnered immense investor interest, pulling in about $1.7 billion in capital since election. The ETF has returned 8.5% since November 8 and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.
Broad market sentiments have turned extremely bullish on pro-growth economic policies by President-elect Trump. He has promised to accelerate economic growth, spend big time on infrastructure, reduce regulations, cut taxes and create more jobs in the country that will likely flood companies with excess cash and earnings growth. It will also lead to a wave of buybacks, and mergers and acquisitions. In particular, industrials and material sectors will be the biggest beneficiaries of Trump’s policies in 2017 (read: 5 Top-Ranked Sector ETFs Thankful to Trump).
So, it makes sense to add the top-ranked ETFs of these two sectors in our Christmas tree. First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) and PowerShares S&P SmallCap Materials Fund (PSCM - Free Report) could form the fronds and leaves of the tree. AIRR offers exposure to the small and mid cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. The product has $130.7 million in AUM and charges 70 bps in fees and expenses. It surged about 23% since election and has a Zacks ETF Rank of 2 with a High risk outlook.
On the other hand, PSCM is a small cap centric fund that tracks the S&P SmallCap 600 Capped Materials Index. The ETF has accumulated $102.9 million in its asset base and has an expense ratio of 0.29%. It gained 21% in the same time frame and has a Zacks ETF Rank of 1 or ‘Strong Buy’ with a High risk outlook (read: 6 ETFs to Play Small-Cap Surge for Big Gains).
For the top layer, we have chosen SPDR S&P Regional Banking ETF (KRE - Free Report) as it is backed by the dual tailwinds of Trump policy and the rising rate environment next year. Trump seeks to deregulate the industry and dismantle the Dodd-Frank Act, which was enacted in the aftermath of the financial crisis and crimped some of the business lines of the banks. As a result, KRE surged nearly 27.6% after election. It is one of largest and the most popular ETFs in the banking space with AUM of $3.5 billion and tracks the S&P Regional Banks Select Industry Index. It charges 35 bps a year in fees and has a Zacks ETF Rank of 1 with a High risk outlook (read: 6 ETFs Breezing Past Dow Jones This Quarter).
At the very top is the star ETF of 2016 – PureFunds ISE Junior Silver ETF (SILJ - Free Report) . The product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. Canadian firms take the lion’s share while the U.S., Peru and United Kingdom take the remaining portion in the portfolio. The fund has managed assets worth $46.2 million and charges 69 bps in annual fees. It has soared 120.5% this year and has the potential to outperform next year as well given the recovery in global manufacturing and industrial activities (read: 5 ETFs Up Over 100% This Year).
With the structure ready, we now have to decorate the tree with bells, candies and lights. While most of the ETFs could be part of this beautification, we have chosen those that have a top Zacks ETF Rank or are currently hot on the market.
Notably, small cap ETFs led the way higher in 2016 with PowerShares Russell 2000 Pure Growth Portfolio indicating ringing bells. The product has climbed 32.9% this year and carries a Zacks ETF Rank of 2 with a Medium risk outlook, suggesting its continued outperformance. This fund provides pure exposure to the small cap value segment by tracking the Russell 2000 Pure Value Index. It is often overlooked by investors as depicted by its AUM of $81.3 million. Expense ratio comes in at 0.39%.
The best ETF that could nicely fit the candy decor is WisdomTree Europe Hedged Equity Fund (HEDJ - Free Report) since the long-awaited milestone – euro parity with the U.S. dollar – seems much real in 2017 with the 14-year high dollar against the euro. This fund offers exposure to a wide array of European stocks while at the same time provides hedge against any fall in the euro. It has returned 6.7% so far this year and will continue to provide sweet returns in 2017 if the trend remains the same. HEDJ has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: Profit from Currency Hedged ETFs If Euro Falls to Parity).
Now, to brighten up the tree, let’s add iShares PHLX Semiconductor ETF (SOXX - Free Report) . The fund hit a record high of $125.69 in yesterday’s trading, representing a gain of over 39% for this year. It follows the PHLX SOX Semiconductor Sector Index, charging 48 bps in fees a year from investors. It has amassed $689.8 million in its asset base and has a Zacks Rank #2 with a High risk outlook. Being a cyclical sector, this semiconductor ETF tends to move higher with market rallies. Ongoing consolidations, emerging technologies and impressive earnings from leaders in the industry have added to its strength.
The Christmas tree of ETF is now ready for investors. May it spread cheer with the jingle of Santa’s bells.
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Putting Up the Tree with the Promising ETFs of 2017
Christmas celebration is incomplete without an evergreen tree, a symbol of goodwill and love with all the shining lights and silver bells, brining joy and glee to every heart. Given its significance in this season of joy, we have built a tree with the most verdant ETFs of 2016 that could stand tall in 2017.
The base, which is the most valuable portion of the tree, with all the gifts there, is made by none other than SPDR Dow Jones Industrial Average ETF (DIA - Free Report) . The fund, tracking the Dow Jones Industrial Average, has been on a stellar ride especially after the election. As Dow Jones is within striking distance of the 20,000 level milestone, DIA has garnered immense investor interest, pulling in about $1.7 billion in capital since election. The ETF has returned 8.5% since November 8 and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.
Broad market sentiments have turned extremely bullish on pro-growth economic policies by President-elect Trump. He has promised to accelerate economic growth, spend big time on infrastructure, reduce regulations, cut taxes and create more jobs in the country that will likely flood companies with excess cash and earnings growth. It will also lead to a wave of buybacks, and mergers and acquisitions. In particular, industrials and material sectors will be the biggest beneficiaries of Trump’s policies in 2017 (read: 5 Top-Ranked Sector ETFs Thankful to Trump).
So, it makes sense to add the top-ranked ETFs of these two sectors in our Christmas tree. First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) and PowerShares S&P SmallCap Materials Fund (PSCM - Free Report) could form the fronds and leaves of the tree. AIRR offers exposure to the small and mid cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. The product has $130.7 million in AUM and charges 70 bps in fees and expenses. It surged about 23% since election and has a Zacks ETF Rank of 2 with a High risk outlook.
On the other hand, PSCM is a small cap centric fund that tracks the S&P SmallCap 600 Capped Materials Index. The ETF has accumulated $102.9 million in its asset base and has an expense ratio of 0.29%. It gained 21% in the same time frame and has a Zacks ETF Rank of 1 or ‘Strong Buy’ with a High risk outlook (read: 6 ETFs to Play Small-Cap Surge for Big Gains).
For the top layer, we have chosen SPDR S&P Regional Banking ETF (KRE - Free Report) as it is backed by the dual tailwinds of Trump policy and the rising rate environment next year. Trump seeks to deregulate the industry and dismantle the Dodd-Frank Act, which was enacted in the aftermath of the financial crisis and crimped some of the business lines of the banks. As a result, KRE surged nearly 27.6% after election. It is one of largest and the most popular ETFs in the banking space with AUM of $3.5 billion and tracks the S&P Regional Banks Select Industry Index. It charges 35 bps a year in fees and has a Zacks ETF Rank of 1 with a High risk outlook (read: 6 ETFs Breezing Past Dow Jones This Quarter).
At the very top is the star ETF of 2016 – PureFunds ISE Junior Silver ETF (SILJ - Free Report) . The product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. Canadian firms take the lion’s share while the U.S., Peru and United Kingdom take the remaining portion in the portfolio. The fund has managed assets worth $46.2 million and charges 69 bps in annual fees. It has soared 120.5% this year and has the potential to outperform next year as well given the recovery in global manufacturing and industrial activities (read: 5 ETFs Up Over 100% This Year).
With the structure ready, we now have to decorate the tree with bells, candies and lights. While most of the ETFs could be part of this beautification, we have chosen those that have a top Zacks ETF Rank or are currently hot on the market.
Notably, small cap ETFs led the way higher in 2016 with PowerShares Russell 2000 Pure Growth Portfolio indicating ringing bells. The product has climbed 32.9% this year and carries a Zacks ETF Rank of 2 with a Medium risk outlook, suggesting its continued outperformance. This fund provides pure exposure to the small cap value segment by tracking the Russell 2000 Pure Value Index. It is often overlooked by investors as depicted by its AUM of $81.3 million. Expense ratio comes in at 0.39%.
The best ETF that could nicely fit the candy decor is WisdomTree Europe Hedged Equity Fund (HEDJ - Free Report) since the long-awaited milestone – euro parity with the U.S. dollar – seems much real in 2017 with the 14-year high dollar against the euro. This fund offers exposure to a wide array of European stocks while at the same time provides hedge against any fall in the euro. It has returned 6.7% so far this year and will continue to provide sweet returns in 2017 if the trend remains the same. HEDJ has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: Profit from Currency Hedged ETFs If Euro Falls to Parity).
Now, to brighten up the tree, let’s add iShares PHLX Semiconductor ETF (SOXX - Free Report) . The fund hit a record high of $125.69 in yesterday’s trading, representing a gain of over 39% for this year. It follows the PHLX SOX Semiconductor Sector Index, charging 48 bps in fees a year from investors. It has amassed $689.8 million in its asset base and has a Zacks Rank #2 with a High risk outlook. Being a cyclical sector, this semiconductor ETF tends to move higher with market rallies. Ongoing consolidations, emerging technologies and impressive earnings from leaders in the industry have added to its strength.
The Christmas tree of ETF is now ready for investors. May it spread cheer with the jingle of Santa’s bells.
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 >>