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Wall Street Shrugs Off Trade Fears: 6 Large-Cap ETF Picks
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The Wall Street has shown immense strength, shrugging of escalating trade war concerns between the United States and China. All the three major large-cap indices were up at least 0.5% on Sep 18 with Dow Jones logging in the best day in about three weeks. This suggests strong complacency in the stock market backed by booming economy and strong corporate earnings.
A slew of upbeat economic data indicates a healthier economy. The U.S. economy is witnessing the fastest pace of growth in nearly four years with a nearly two-decade low unemployment rate of 3.9% and 18-year high consumer confidence. Historic tax cuts, higher government spending and deregulation are fueling growth. Additionally, the Fed is on track for gradual rates hike with the third increase of this year expected as soon as this month. A rising rate scenario also signals a strengthening economy, which is spurring growth in the stock market (read: ETFs & Stocks to Surge on Solid August Industrial Production).
Second-quarter earnings growth reached its highest level since 2010. Earnings will likely continue to grow in double digits in Q3 as well, per the latest Earnings Trends report.
Per the latest Bank of America Merrill Lynch survey, investors are increasingly optimistic about American stocks. Allocation to U.S. stocks surged to a net 21% overweight, the highest since January 2015 and was the most favored equity region globally for the second straight month. A net 69% of those polled said the United States is the most favorable region when it comes to earnings expectations, a record level in the 17-year history of the survey. Further, the probability of a trade war, the biggest risk for the stock market, has declined to 43% in the latest survey from 55% seen in the previous month’s survey.
President Trump has imposed a new tariff of 10% on $200 billion worth of Chinese goods starting Sep 24. The tariff will be increased to 25% effective Jan 1. In retaliation, China also slapped tariff of 10% on more than 5,000 American products worth $60 billion. The new tariffs from both sides are lower than expected and resulted in a market rally. This is especially true as Washington was expected to announce 25% duties while Beijing was anticipated to levy 20%. levy (read: Trump Slaps $200B in China Tariffs: ETFs in Focus).
Moreover, Trump has spared some consumer-focused technology products like smart watches and Bluetooth devices from the latest round of tariffs on Chinese goods. This has rekindled optimism pushing the share price of Apple (AAPL - Free Report) and Fitbit higher.
Given this, investors may want to consider cycling into the large-cap space in order to obtain a nice momentum play. While looking at individual companies is certainly an option, a focus on top-ranked large cap ETFs could be a less risky way to tap into the same broad trends. Below, we have highlighted six of them that are rising this month and ahead of 0.2% gain for the S&P 500 ETF (SPY - Free Report) .
Also, these funds have a Zacks ETF Rank #2 (Buy) and AUM of more than $1 billion, ensuring their popularity and enough tradability.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) – Up 1.9%
This product offers exposure to the high-dividend yielding U.S. companies that have a record of consistent dividend payments. This can be easily done by tracking the Dow Jones U.S. Dividend 100 Index. The fund has amassed $8.3 billion in its asset base and charges 7 bps in annual fees and trades in solid volume of more than 795,000 shares a day (read: 5 Dividend ETFs Worth Buying Now).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) – Up 1.2%
This is one of the largest and most-popular ETFs in the large-cap space with AUM of $22.2 billion and average daily volume of 4.2 million shares. It tracks the Dow Jones Index and charges 17 bps in annual fees.
Vanguard Mega Cap Value ETF (MGV - Free Report) – Up 1.2%
This product offers exposure to the value segment of the mega-cap stocks and follows the CRSP US Mega Cap Value Index. It has AUM of $2.1 billion and trades in a moderate average daily volume of 63,000 shares. MGV charges 7 bps in annual fees.
Vanguard High Dividend Yield ETF (VYM - Free Report) – Up 1.1%
This fund provides exposure to high-yielding dividend stocks by tracking the FTSE High Dividend Yield Index. It has amassed $22.3 billion in its asset base while trading in volume of 716,000 shares a day on average. Expense ratio comes in at 0.08%.
With AUM of $1.6 billion, this ETF also targets the value segment by tracking the S&P 500 Pure Value Index. It has been able to manage $1.6 billion in its asset base and trades in an average daily volume of 466,000 shares. It is one of the low cost choices in the large-cap space, charging 4 bps in annual fees (read: Guide to the 25 Cheapest ETFs).
Schwab Fundamental U.S. Large Company Index ETF (FNDX - Free Report) – Up 0.8%
With AUM of $4.8 billion, this ETF follows the Russell RAFI US Large Company Index. It has expense ratio of 0.25% and average daily volume of 306,000 shares.
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Wall Street Shrugs Off Trade Fears: 6 Large-Cap ETF Picks
The Wall Street has shown immense strength, shrugging of escalating trade war concerns between the United States and China. All the three major large-cap indices were up at least 0.5% on Sep 18 with Dow Jones logging in the best day in about three weeks. This suggests strong complacency in the stock market backed by booming economy and strong corporate earnings.
A slew of upbeat economic data indicates a healthier economy. The U.S. economy is witnessing the fastest pace of growth in nearly four years with a nearly two-decade low unemployment rate of 3.9% and 18-year high consumer confidence. Historic tax cuts, higher government spending and deregulation are fueling growth. Additionally, the Fed is on track for gradual rates hike with the third increase of this year expected as soon as this month. A rising rate scenario also signals a strengthening economy, which is spurring growth in the stock market (read: ETFs & Stocks to Surge on Solid August Industrial Production).
Second-quarter earnings growth reached its highest level since 2010. Earnings will likely continue to grow in double digits in Q3 as well, per the latest Earnings Trends report.
Per the latest Bank of America Merrill Lynch survey, investors are increasingly optimistic about American stocks. Allocation to U.S. stocks surged to a net 21% overweight, the highest since January 2015 and was the most favored equity region globally for the second straight month. A net 69% of those polled said the United States is the most favorable region when it comes to earnings expectations, a record level in the 17-year history of the survey. Further, the probability of a trade war, the biggest risk for the stock market, has declined to 43% in the latest survey from 55% seen in the previous month’s survey.
President Trump has imposed a new tariff of 10% on $200 billion worth of Chinese goods starting Sep 24. The tariff will be increased to 25% effective Jan 1. In retaliation, China also slapped tariff of 10% on more than 5,000 American products worth $60 billion. The new tariffs from both sides are lower than expected and resulted in a market rally. This is especially true as Washington was expected to announce 25% duties while Beijing was anticipated to levy 20%. levy (read: Trump Slaps $200B in China Tariffs: ETFs in Focus).
Moreover, Trump has spared some consumer-focused technology products like smart watches and Bluetooth devices from the latest round of tariffs on Chinese goods. This has rekindled optimism pushing the share price of Apple (AAPL - Free Report) and Fitbit higher.
Given this, investors may want to consider cycling into the large-cap space in order to obtain a nice momentum play. While looking at individual companies is certainly an option, a focus on top-ranked large cap ETFs could be a less risky way to tap into the same broad trends. Below, we have highlighted six of them that are rising this month and ahead of 0.2% gain for the S&P 500 ETF (SPY - Free Report) .
Also, these funds have a Zacks ETF Rank #2 (Buy) and AUM of more than $1 billion, ensuring their popularity and enough tradability.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) – Up 1.9%
This product offers exposure to the high-dividend yielding U.S. companies that have a record of consistent dividend payments. This can be easily done by tracking the Dow Jones U.S. Dividend 100 Index. The fund has amassed $8.3 billion in its asset base and charges 7 bps in annual fees and trades in solid volume of more than 795,000 shares a day (read: 5 Dividend ETFs Worth Buying Now).
SPDR Dow Jones Industrial Average ETF (DIA - Free Report) – Up 1.2%
This is one of the largest and most-popular ETFs in the large-cap space with AUM of $22.2 billion and average daily volume of 4.2 million shares. It tracks the Dow Jones Index and charges 17 bps in annual fees.
Vanguard Mega Cap Value ETF (MGV - Free Report) – Up 1.2%
This product offers exposure to the value segment of the mega-cap stocks and follows the CRSP US Mega Cap Value Index. It has AUM of $2.1 billion and trades in a moderate average daily volume of 63,000 shares. MGV charges 7 bps in annual fees.
Vanguard High Dividend Yield ETF (VYM - Free Report) – Up 1.1%
This fund provides exposure to high-yielding dividend stocks by tracking the FTSE High Dividend Yield Index. It has amassed $22.3 billion in its asset base while trading in volume of 716,000 shares a day on average. Expense ratio comes in at 0.08%.
SPDR S&P 500 Value ETF (SPYV - Free Report) – Up 1%
With AUM of $1.6 billion, this ETF also targets the value segment by tracking the S&P 500 Pure Value Index. It has been able to manage $1.6 billion in its asset base and trades in an average daily volume of 466,000 shares. It is one of the low cost choices in the large-cap space, charging 4 bps in annual fees (read: Guide to the 25 Cheapest ETFs).
Schwab Fundamental U.S. Large Company Index ETF (FNDX - Free Report) – Up 0.8%
With AUM of $4.8 billion, this ETF follows the Russell RAFI US Large Company Index. It has expense ratio of 0.25% and average daily volume of 306,000 shares.
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 >>