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Buy High-Beta & Momentum ETFs to Follow J.P. Morgan's Vision

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Wall Street has been in great shape since the fourth quarter of 2020, thanks to the vaccine news. In fact, the S&P 500 has gained about 75% from its March-low hit due to the outbreak of coronavirus, while the Nasdaq Composite has jumped about 100%. This has sparked overvaluation concerns or bubble fears in many investors’ mind.

But the chief investment officer at JPMorgan Asset Management Bob Michele has shrugged off such fears and suggested investors to “ride the rally.” J.P. Morgan is betting on the winning momentum across junk bonds, emerging market debt and risky bank securities, as quoted on Bloomberg. New fiscal stimulus in the Joe Biden Presidency has been encouraging J.P. Morgan toward the same.

Notably, Biden plans to take his case for a $1.9-trillion stimulus plan directly to the U.S. public on his first official trip outside Washington. The move is probably to persuade Congress on sealing the stimulus deal on his terms.

Notably, Republicans on Capitol Hill are not in full support of Democrats’ proposed relief package, which includes “$1,400 cheques for individuals, extra funding for unemployment benefits, an increase in child tax credits and aid to state and local governments.”

Michele believes that with global central banks acting super-dovish and governments still providing fiscal help to ailing economies, markets are not likely to retreat. We would also like to note that the U.S. economy has been gaining ground, though the job market is yet to heal.

But then, Michele believes the next Federal Reserve rate hike won’t happen before 2023, when a material pick-up in inflation and growth will happen. Till then, risk assets will keep on rising on cheap money inflow.

In this regard, investors can join the market optimism and play high beta and momentum ETFs as long as the trend is alive.

High-Beta ETFs

Beta is directly related to market movement. Notably, high-beta funds tend to rise or fall more than the stock market and are thus more volatile. When markets soar, high-beta funds experience larger gains than the broader market counterparts and thus, outpace rivals.

Invesco S&P 500 High Beta Portfolio (SPHB - Free Report)

This fund tracks the performance of 100 stocks from the S&P 500 index with the highest realized volatility over the past 12 months. The fund charges 25 basis points (bps) in fees.

High-Momentum ETFs

Momentum investing might be an intriguing idea for those seeking higher returns in a short spell.

Fidelity Momentum Factor ETF (FDMO - Free Report)

The Fidelity U.S. Momentum Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies that “exhibit positive momentum signals.” It charges 29 bps in fees.

iShares Edge MSCI USA Momentum Factor ETF (MTUM - Free Report)

This ETF seeks to track the performance of large and mid-cap U.S. stocks exhibiting relatively higher momentum characteristics. The fund charges 15 bps in fees.

Invesco DWA Momentum ETF (PDP - Free Report)

The underlying Dorsey Wright Technical Leaders Index includes approximately 100 U.S.-listed companies that demonstrate powerful relative strength characteristics and constructed pursuant to Dorsey Wright proprietary methodology. The fund charges 62 bps in fees.

SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report)

The underlying Russell 1000 Momentum Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor comprising high-momentum characteristics. The fund charges 20 bps in fees.

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