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Wall Street has been rallying lately on strong global growth and rising investor optimism on the White House administration after the tax reform was signed into law. Moreover, the earnings season is underway and investors have strong expectations from the same.
The global economy is expected to grow almost 4% this year in purchasing-power-parity (PPP) terms, a seven-year high, according to research conducted by PricewaterhouseCoopers (PwC) (read: Top-Ranked Growth ETFs at New Highs to Tap for 2018).
Market Movers
United States’ GDP grew 3.2% in the third quarter compared with 3.1% in the previous quarter. Although the third quarter reading was below market expectations of 3.3%, it was the highest since first quarter 2015. U.S. retail sales grew 4.2% in 2017 compared with 3.2% in 2016, showing signs of a strengthening economy.
Moreover, energy stocks have been staging a recovery, as Brent crude crossed the $70 mark for the first time in three years. Moreover, United States crude inventories fell 4.95 million barrels in the week to Jan 5, 2018, driving crude price higher. OPEC’s decision to extend production cuts to the end of 2018, coupled with fears of possible supply disruptions, owing to rising political unrest in OPEC member nations, Iran and Venezuela, have also supported oil prices.
Coming to President Donald Trump’s tax reform, it is expected to benefit large-cap companies having significant international exposure, as they can now repatriate their earnings at a lot lower tax rate.
Risks Involved
Geopolitical risks weigh on the markets. The North Korean dictator Kim Jong-Un threatened the United States that the entire U.S. territory is within its range of nuclear weapons. "The entire United States is within range of our nuclear weapons, a nuclear button is always on my desk. This is reality, not a threat," Kim stated in his New Years speech.
Owing to large-cap companies’ high international exposure, strong global growth is expected to benefit these companies. However, if Trump’s tax reform and Fed policy tightening lead to a rally in the greenback, it might be a negative for large-cap stocks (read: What Rising Rates? Play These Cyclical ETFs).
Let us now discuss three ETFs focused on providing exposure to the space.
This fund is a popular ETF that maintains a hefty exposure to U.S. tech companies and tracks the Nasdaq 100 index.
It has AUM of $61.4 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Health Care with 60.7%, 21.4% and 10.3% allocation, respectively (as of Jan 12, 2018). The fund’s top three holdings are Apple Inc (AAPL - Free Report) , Microsoft Corporation (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) with 11.8%, 8.9% and 8.1% allocation, respectively (as of Jan 12, 2018). The fund has returned 35.2% in a year. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
This fund is a popular ETF targeting large-cap U.S. companies and tracks the Russell 1000 Growth Index.
It has AUM of $42.0 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Industrials with 38.1%, 18.3% and 12.9% allocation, respectively (as of Jan 12, 2018). The fund’s top three holdings are Apple Inc, Microsoft Corporation and Amazon.com Inc with 6.8%, 5.0% and 3.9% allocation, respectively (as of Jan 12, 2018). The fund has returned 33.1% in a year. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
This fund is a popular ETF targeting large-cap U.S. companies and tracks the MSCI US Prime Market Growth Index.
It has AUM of $32.9 billion and charges a fee of 6 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Services and Health Care with 27.3%, 20.1% and 13.2% allocation, respectively (as of Nov 30, 2017). The fund’s top three holdings are Apple Inc, Alphabet Inc (GOOGL - Free Report) and Amazon.com Inc with 7.2%, 5.5% and 4.4% allocation, respectively (as of Nov 30, 2017). The fund has returned 30.6% in a year. It has a Zacks ETF Rank #1 with a Medium risk outlook.
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3 Large-Cap Growth ETFs for Your Portfolio
Wall Street has been rallying lately on strong global growth and rising investor optimism on the White House administration after the tax reform was signed into law. Moreover, the earnings season is underway and investors have strong expectations from the same.
The global economy is expected to grow almost 4% this year in purchasing-power-parity (PPP) terms, a seven-year high, according to research conducted by PricewaterhouseCoopers (PwC) (read: Top-Ranked Growth ETFs at New Highs to Tap for 2018).
Market Movers
United States’ GDP grew 3.2% in the third quarter compared with 3.1% in the previous quarter. Although the third quarter reading was below market expectations of 3.3%, it was the highest since first quarter 2015. U.S. retail sales grew 4.2% in 2017 compared with 3.2% in 2016, showing signs of a strengthening economy.
Moreover, energy stocks have been staging a recovery, as Brent crude crossed the $70 mark for the first time in three years. Moreover, United States crude inventories fell 4.95 million barrels in the week to Jan 5, 2018, driving crude price higher. OPEC’s decision to extend production cuts to the end of 2018, coupled with fears of possible supply disruptions, owing to rising political unrest in OPEC member nations, Iran and Venezuela, have also supported oil prices.
Coming to President Donald Trump’s tax reform, it is expected to benefit large-cap companies having significant international exposure, as they can now repatriate their earnings at a lot lower tax rate.
Risks Involved
Geopolitical risks weigh on the markets. The North Korean dictator Kim Jong-Un threatened the United States that the entire U.S. territory is within its range of nuclear weapons. "The entire United States is within range of our nuclear weapons, a nuclear button is always on my desk. This is reality, not a threat," Kim stated in his New Years speech.
Owing to large-cap companies’ high international exposure, strong global growth is expected to benefit these companies. However, if Trump’s tax reform and Fed policy tightening lead to a rally in the greenback, it might be a negative for large-cap stocks (read: What Rising Rates? Play These Cyclical ETFs).
Let us now discuss three ETFs focused on providing exposure to the space.
PowerShares QQQ ETF (QQQ - Free Report)
This fund is a popular ETF that maintains a hefty exposure to U.S. tech companies and tracks the Nasdaq 100 index.
It has AUM of $61.4 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Health Care with 60.7%, 21.4% and 10.3% allocation, respectively (as of Jan 12, 2018). The fund’s top three holdings are Apple Inc (AAPL - Free Report) , Microsoft Corporation (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) with 11.8%, 8.9% and 8.1% allocation, respectively (as of Jan 12, 2018). The fund has returned 35.2% in a year. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
iShares Russell 1000 Growth ETF (IWF - Free Report)
This fund is a popular ETF targeting large-cap U.S. companies and tracks the Russell 1000 Growth Index.
It has AUM of $42.0 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Industrials with 38.1%, 18.3% and 12.9% allocation, respectively (as of Jan 12, 2018). The fund’s top three holdings are Apple Inc, Microsoft Corporation and Amazon.com Inc with 6.8%, 5.0% and 3.9% allocation, respectively (as of Jan 12, 2018). The fund has returned 33.1% in a year. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Vanguard Growth ETF (VUG - Free Report)
This fund is a popular ETF targeting large-cap U.S. companies and tracks the MSCI US Prime Market Growth Index.
It has AUM of $32.9 billion and charges a fee of 6 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Services and Health Care with 27.3%, 20.1% and 13.2% allocation, respectively (as of Nov 30, 2017). The fund’s top three holdings are Apple Inc, Alphabet Inc (GOOGL - Free Report) and Amazon.com Inc with 7.2%, 5.5% and 4.4% allocation, respectively (as of Nov 30, 2017). The fund has returned 30.6% in a year. It has a Zacks ETF Rank #1 with a Medium risk outlook.
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 >>