Wall Street has been enjoying an astounding ascent this year with no signs of slowdown despite the surge in yields that took the sheen away from the high-growth technology sector.
Notably, the S&P 500 has been hitting a series of record highs and rebounded about 83% from its bottom reached in March last year, representing the best start to the new bull market on record, per LPL data. The solid run is likely to continue on hopes of solid economic recovery backed by continued progress in more COVID-19 vaccines, rapid vaccinations, reopening of the economy and a slew of new stimulus measures. These factors have been fueling stronger growth in the economy as depicted by the rounds of upbeat data. U.S. services activity in March surged to a record high due to robust growth in new orders while a measure of U.S. manufacturing activity soared to its highest level in more than 37 years in March driven by strong growth in new orders. Hiring also surged to a seven-month high last month while unemployment dropped to a pandemic low of 6% (read: U.S. Manufacturing Best Since 1983: ETFs to Win). Americans are growing more confident about the economy given that the University of Michigan’s final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. The Conference Board on consumer confidence index also jumped to 109.7 in March — the highest level since the onset of the pandemic in March 2020. The combination of factors has resulted in increased industrial activity and pickup in consumer demand, thereby driving stocks highs. Further, the Fed’s continued accommodative stance and better-than-expected earnings added to the strength. The overall earnings picture continues to improve — a trend that will accelerate toward the summer months as signs of a sharp economic rebound emerge. Total Q1 2021 earnings are expected to be up 20.6% from the year-ago level on 5.6% higher revenues with a combination of easy comparisons and strong gains in a number of sectors, per the Earnings Trends. Added to the enthusiasm is the latest International Monetary Fund (IMF) projection that the United States is likely to become the engine of global economic growth this year. The agency upgraded the U.S. economic growth forecast from 5.1% to 6.4% for this year, marking the strongest growth in decades. While there are several options to play the bullish backdrop, high-beta ETFs seem a perfect bet at present to make huge profits. Why High Beta?
Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship to market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates that the stock price or fund is less volatile than the market.
That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and thus, outpace the rivals. However, these exhibit a higher level of volatility. We have highlighted seven high-beta ETFs that could be compelling choice for investors to tap market-beating returns. These funds have AUM of more than $50 million and offers exposure to various sectors: Pacer Lunt Large Cap Alternator ETF ( ALTL Quick Quote ALTL - Free Report) This ETF is a strategy-driven, large-cap ETF that seeks to track the investment returns of an index that alternates exposure between low-volatility and high-beta stocks in the S&P 500 Index. Zacks Rank: NA Beta: 2.01 AUM: $63.7 million Expense Ratio: 0.60% Invesco S&P SmallCap 600 Pure Value ETF ( RZV Quick Quote RZV - Free Report) This fund provides pure exposure to small-cap stocks that exhibit strong value characteristics by tracking the S&P SmallCap 600 Pure Value Index (read: 4 Reasons Why Value ETFs Continue to Outperform). Zacks Rank: #3 (Hold) Beta: 1.72 AUM: $350 million Expense Ratio: 0.35% Invesco S&P MidCap 400 Pure Value ETF ( RFV Quick Quote RFV - Free Report) This product offers exposure to the mid-cap stocks that exhibit strong value characteristics by tracking the S&P Midcap 400 Pure Value Index. Zacks Rank: #3 Beta: 1.66 AUM: $151.4 million Expense Ratio: 0.35% Fidelity Blue Chip Growth ETF ( FBCG Quick Quote FBCG - Free Report) The fund is also actively managed and seeks to invest in blue-chip companies, which Fidelity Management views as well-known, well-established and well-capitalized with above-average growth potential. Zacks Rank: N/A Beta: 1.65 AUM: $303.1 million Expense Ratio: 0.59% Avantis U.S. Small Cap Value ETF ( AVUV Quick Quote AVUV - Free Report) This fund invests in a broad set of U.S. small-cap companies and is designed to increase expected returns by focusing on firms trading at low valuations with higher profitability ratios. It tracks the Russell 2000 Value Index. Zacks Rank: NA Beta: 1.62 AUM: $956.2 million Expense Ratio: 0.25% American Century Focused Dynamic Growth ETF ( FDG Quick Quote FDG - Free Report) It seeks long-term capital growth through investments in a focused number of large and mid-capitalization U.S. growth stocks. The fund uses a strategy designed to invest in early-stage, rapid-growth companies with a competitive advantage, high profitability, growth and scalability to sustain their leading position (read: Economic Boom to Go Into 2023? ETFs to Play). Zacks Rank: N/A Beta: 1.62 AUM: $227.6 million Expense Ratio: 0.45% Invesco S&P 500 High Beta ETF ( SPHB Quick Quote SPHB - Free Report) This fund offers exposure to stocks with the highest sensitivity to market movements, or beta over the past 12 months. It follows the S&P 500 High Beta Index. Zacks Rank: N/A Beta: 1.60 AUM: $1.7 billion Expense Ratio: 0.25% 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 >>