Back to top

Image: Bigstock

Top-Ranked ETFs to Boost Your Valentine's Portfolio

Read MoreHide Full Article

The subdued Wall Street performance over the last two days might be indicative of market’s dissipating momentum. The broader S&P 500 index, which has climbed around 5.4% so far in February, has gained only around 0.2% for three consecutive days in this week starting Feb 8.

In this regard, Gregory Faranello, head of U.S. rates trading at AmeriVet Securities has said that “we pulled a lot of optimism forward, and the market is trying to figure out where we go from here. The fiscal and monetary side of the equation seems priced into the market. Going forward, we need to see a broader economic recovery, a broader reopening and a broader dissemination of the vaccine,” per a CNBC article.

Investors showed optimism on positive developments with regard to additional stimulus talks. President Joe Biden held a meeting with Treasury Secretary Janet Yellen and the chief executives of some of the country’s major businesses in the Oval Office to talk about his $1.9-trillion coronavirus relief bill and the outlook for the U.S. economy, per a CNBC article.

In order to support the United States’ return to full-employment by 2022, Yellen recently requested Congress to pass Biden’s stimulus plan, per a CNBC article. Along with other benefits, the package includes $1,400 stimulus checks, a supplemental jobless benefit, and COVID-19 vaccine and testing funds.

It is also being believed that wider coronavirus vaccine rollouts are making a strong case in favor of faster U.S. economic recovery in 2021. Biden is expected to increase the distribution of coronavirus vaccines by rolling out more funds to local and state officials, increasing the number of vaccination sites and introducing a national education campaign, per a CNBC article.

Also, Federal Reserve Chairman, Jerome Powell recently said that a “patiently accommodative” monetary policy is needed to support the economy after observing the sluggish labor market conditions, per the above-mentioned article. Thus, Chris Zaccarelli, chief investment officer for Independent Advisor Alliance has said that “massive fiscal stimulus and an extremely accommodative Federal Reserve should keep equities moving higher,” as stated in a CNBC article.

Top-Ranked ETFs to Consider

Keeping the current scenario in mind, let’s discuss ETFs which promise great returns in 2021 and also sport a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy):

First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report)

Investors have high expectations from 2021 after a pandemic-stricken 2020. The coronavirus vaccine rollout, introduction of the much-awaited fresh round of stimulus and the Fed’s continuous support to keep interest rates low have added to investors’ hope of faster economic recovery in the United States. Given the bullishness, investors seeking to capitalize on the strong trends should consider growth ETFs.

FTC seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the NASDAQ AlphaDEX Large Cap Growth Index. It has an AUM of $1.07 billion. The fund sports a Zacks ETF Rank #1 currently, with a Medium-risk outlook (read: Here's Why Growth ETFs are Ruling the 52-Week High Chart).

Fidelity Nasdaq Composite Index ETF (ONEQ - Free Report)

Some major-technology players have shown resilience to the coronavirus outbreak-led economic slowdown and have supported the Nasdaq Composite index’s rally. Moreover, the ongoing health crisis has highlighted the important role that technology plays with respect to helping people maintain social-distancing norms. The aggravating coronavirus outbreak resulted in Americans spending more time indoors and opting for in-house entertainment modes. Moreover, surging work-from-home and online shopping trends, increasing digital payments, growing video streaming and soaring video game sales have been observed during the pandemic. Keeping up with these new trends, a few major technology stocks have been gaining traction from the buoyancy in demand for their products and services.

This ETF tracks the NASDAQ Composite TR USD. It has AUM of $3.90 billion. The expense ratio comes is 0.21%. The product carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: Ride the Impressive Nasdaq Rally With These 5 ETFs).

iShares PHLX Semiconductor ETF (SOXX - Free Report)

The semiconductor market has held ground amid the coronavirus mayhem. This space has been gaining from expanding digitization and growing dependency on the Internet owing to some new normal trends like online shopping, work from home, digital payments, digitization of healthcare, growing favor for video gaming and many more. In fact, growing adoption of cloud computing and the ongoing infusion of AI, machine learning and IoT are expected to keep the sector brewing with opportunities in 2021.

According to latest World Semiconductor Trade Statistics (WSTS) data, the global semiconductor market is now projected to rise 8.4% in 2021, based on double-digit growth of memory and optoelectronics. The forecast for 2021 is more than the previously-projected growth of 6.2%, made by the WSTS in July.

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the PHLX SOX Semiconductor Sector Index. The index provides exposure to U.S. companies that design, manufacture, and distribute semiconductors. It has an AUM of $5.49 billion. It charges investors 46 basis points (bps) in annual fees as stated in the prospectus. The fund sports a Zacks ETF Rank #1 currently, with a High-risk outlook (read: ETFs to Ride the Tesla-Driven Bitcoin Rally).

The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

The increase of direct payments to Americans definitely comes as a ray of hope for players in the consumer discretionary sector, which attracts a major portion of consumer spending. A number of restaurants and retailers that have resumed business after restrictions were relaxed in the United States should see some accelerated demand and footfall. Also, the leisure and entertainment space should see a rebound as casinos and amusement parks have started welcoming visitors.

The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Consumer Discretionary Select Sector Index. It has an AUM of $19.36 billion. It charges investors 12 bps in annual fees as stated in the prospectus. The fund sports a Zacks ETF Rank #2 currently, with a Medium-risk outlook (read: 5 ETFs to Buy on Amazon's Blockbuster Q4 Earnings).

Fidelity MSCI Materials Index ETF (FMAT - Free Report)

The space is expected to remain strong as coronavirus vaccine rollout and introduction of another round of fiscal stimulus are pointing toward a faster recovering economy. Moreover, there are speculations about a bigger stimulus package after Biden takes over the administration and with a Democrats-controlled Senate, the Biden administration might not have to compromise much for getting the funds passed. Moreover, Biden aims at increasing expenditures on infrastructure development that bodes well for the materials space.

The fund seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Materials Index. It has an AUM of $296.5 million. It charges investors 8 bps in annual fees as stated in the prospectus. The fund sports a Zacks ETF Rank #2 currently, with a Medium-risk outlook (read: What's in Store for Material ETFs in Q4 Earnings?).

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 >>