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5 Top-Ranked ETFs Looking Good After a Decent July
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Wall Street witnessed a decent run on the bourses in July amid the delta-variant scares. The S&P 500 rose 2.3% in the last month seeing strength in utilities, health care, real estate and technology spaces. Notably, the Nasdaq Composite index and the Dow Jones Industrial Average also inched up 1.2% and 1.3% in the previous month.
The U.S. GDP grew at a 6.5% annualized rate in the second quarter of 2021, per the Commerce Department’s first estimate (as mentioned in a CNBC article). However, the metric lagged the Dow Jones estimate of 8.4%. Despite missing the estimate, in absolute term, U.S. GDP in second-quarter 2021 came in at $19.4 trillion, exceeding $19.2 trillion recorded in fourth-quarter 2019, the last quarter before the global outbreak of coronavirus.
Commenting on the market conditions, Brian Belski, chief investment strategist at BMO, has also said, “There has been quite a bit of volatility and price choppiness in the market in recent weeks. Increased concerns over the delta variant and its potential implications for reopening momentum seemed to play a key role in the price action, while peak themes related to economic growth, earnings, and policy support also remained an overhang on risk sentiment,” according to a CNBC article. However, the number of new delta-variant cases is being mostly observed among the unvaccinated population.
Studying the present market scenario, let’s take a look at some top-ranked ETFs that investors can consider adding to their portfolio:
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Consumer confidence in the United States seems impressive as it stays at its highest level since February 2020. The Conference Board's measure of consumer confidence index stands at 129.1, comparing favorably with June’s reading of 128.9. Moreover, July’s reading beat the consensus estimate of the index, slipping to 123.9, per a Reuters’ poll. However, the metric continues to be below the pre-pandemic level of 132.6 in February 2020. The impressive consumer confidence levels are likely to boost the consumer discretionary sector, which attracts a major portion of consumer spending.
This fund tracks the MSCI USA IMI Consumer Discretionary Index. The product has amassed $1.65 billion in its asset base. It charges 8 basis points (bps) in annual fees from investors and carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: Amazon Q2 Earnings Disappoint: ETFs in Focus).
The banking sector has had an impressive run in 2021 so far, after a tough 2020. The S&P Banks Select Industry Index has surged 24.1% year to date, compared with the broader S&P 500 Index’s rally of 15%. Notably, improving prospects for the space amid the rebounding U.S. economy are gaining increased investor attention.
It is a well-known fact that an improving U.S. economy can continue to perk up demand for loans. Also, steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to have received support from the steepening of the yield curve and a modest rise in loan demand.
The fund seeks to provide investment results that before fees and expenses correspond generally to the total return performance of the S&P Regional Banks Select Industry Index. It has AUM of $4.22 billion and charges 0.35% in expense ratio. The fund carries a Zacks ETF Rank #2, with a High-risk outlook (read: 5 Top Performing Banking ETFs in 1H21).
Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities in comparison to other products in the space but might not necessarily have the highest yields.
‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward dividend investing has been rising due to easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth. The demand for these funds is mostly driven by their characteristic of being the major source of consistent income for investors when returns from the equity markets are uncertain. These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields.
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. The fund has AUM of $19.91 billion. It charges 8 bps in fees per year. It carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: Try Dividend Aristocrat ETFs to Fight Rising Delta Variant Woes).
The materials sector, which is most sensitive to global economic growth expectations, is gaining from a dovish Fed. Lower rate put pressure on the U.S. dollar that makes dollar-denominated materials cheap for foreign investors, raising demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, low rates are a boon. Moreover, the Fed’s continued support with easy monetary policies, fiscal stimulus support and reopening of non-essential business are strengthening hopes of rapid recovery from the coronavirus-led slump.
This ETF looks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Materials Index. The fund has AUM of $536 million. It charges 8 bps in fees per year. The fund carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: Materials ETFs Set to Gain As Q2 Earnings Unfold).
The Health Care Select Sector SPDR Fund (XLV - Free Report)
The healthcare sector has been benefiting from COVID-19 vaccines or treatment with many more to come. President Joe Biden has informed about some new initiatives to improve the vaccination rate. One of the measures include making it mandatory for all federal employees to attest to being vaccinated or deal with strict protocols, according to a CNN report.
Major companies are also making it mandatory for their employees to get vaccinated before returning to company campuses. Important names like Google (GOOGL), Facebook (FB), Netflix (NFLX) and BlackRock can be safely added to the list of companies having a vaccine mandate.
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. The fund has AUM of $32.19 billion. It charges 12 bps in fees per year. It carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: 5 Hot Equity ETFs of Last Week to Sizzle on Solid Earnings).
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5 Top-Ranked ETFs Looking Good After a Decent July
Wall Street witnessed a decent run on the bourses in July amid the delta-variant scares. The S&P 500 rose 2.3% in the last month seeing strength in utilities, health care, real estate and technology spaces. Notably, the Nasdaq Composite index and the Dow Jones Industrial Average also inched up 1.2% and 1.3% in the previous month.
The U.S. GDP grew at a 6.5% annualized rate in the second quarter of 2021, per the Commerce Department’s first estimate (as mentioned in a CNBC article). However, the metric lagged the Dow Jones estimate of 8.4%. Despite missing the estimate, in absolute term, U.S. GDP in second-quarter 2021 came in at $19.4 trillion, exceeding $19.2 trillion recorded in fourth-quarter 2019, the last quarter before the global outbreak of coronavirus.
Commenting on the market conditions, Brian Belski, chief investment strategist at BMO, has also said, “There has been quite a bit of volatility and price choppiness in the market in recent weeks. Increased concerns over the delta variant and its potential implications for reopening momentum seemed to play a key role in the price action, while peak themes related to economic growth, earnings, and policy support also remained an overhang on risk sentiment,” according to a CNBC article. However, the number of new delta-variant cases is being mostly observed among the unvaccinated population.
Studying the present market scenario, let’s take a look at some top-ranked ETFs that investors can consider adding to their portfolio:
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Consumer confidence in the United States seems impressive as it stays at its highest level since February 2020. The Conference Board's measure of consumer confidence index stands at 129.1, comparing favorably with June’s reading of 128.9. Moreover, July’s reading beat the consensus estimate of the index, slipping to 123.9, per a Reuters’ poll. However, the metric continues to be below the pre-pandemic level of 132.6 in February 2020. The impressive consumer confidence levels are likely to boost the consumer discretionary sector, which attracts a major portion of consumer spending.
This fund tracks the MSCI USA IMI Consumer Discretionary Index. The product has amassed $1.65 billion in its asset base. It charges 8 basis points (bps) in annual fees from investors and carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: Amazon Q2 Earnings Disappoint: ETFs in Focus).
SPDR S&P Regional Banking ETF (KRE - Free Report)
The banking sector has had an impressive run in 2021 so far, after a tough 2020. The S&P Banks Select Industry Index has surged 24.1% year to date, compared with the broader S&P 500 Index’s rally of 15%. Notably, improving prospects for the space amid the rebounding U.S. economy are gaining increased investor attention.
It is a well-known fact that an improving U.S. economy can continue to perk up demand for loans. Also, steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to have received support from the steepening of the yield curve and a modest rise in loan demand.
The fund seeks to provide investment results that before fees and expenses correspond generally to the total return performance of the S&P Regional Banks Select Industry Index. It has AUM of $4.22 billion and charges 0.35% in expense ratio. The fund carries a Zacks ETF Rank #2, with a High-risk outlook (read: 5 Top Performing Banking ETFs in 1H21).
iShares Core Dividend Growth ETF (DGRO - Free Report)
Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities in comparison to other products in the space but might not necessarily have the highest yields.
‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward dividend investing has been rising due to easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth. The demand for these funds is mostly driven by their characteristic of being the major source of consistent income for investors when returns from the equity markets are uncertain. These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields.
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. The fund has AUM of $19.91 billion. It charges 8 bps in fees per year. It carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: Try Dividend Aristocrat ETFs to Fight Rising Delta Variant Woes).
Fidelity MSCI Materials Index ETF (FMAT - Free Report)
The materials sector, which is most sensitive to global economic growth expectations, is gaining from a dovish Fed. Lower rate put pressure on the U.S. dollar that makes dollar-denominated materials cheap for foreign investors, raising demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, low rates are a boon. Moreover, the Fed’s continued support with easy monetary policies, fiscal stimulus support and reopening of non-essential business are strengthening hopes of rapid recovery from the coronavirus-led slump.
This ETF looks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Materials Index. The fund has AUM of $536 million. It charges 8 bps in fees per year. The fund carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: Materials ETFs Set to Gain As Q2 Earnings Unfold).
The Health Care Select Sector SPDR Fund (XLV - Free Report)
The healthcare sector has been benefiting from COVID-19 vaccines or treatment with many more to come. President Joe Biden has informed about some new initiatives to improve the vaccination rate. One of the measures include making it mandatory for all federal employees to attest to being vaccinated or deal with strict protocols, according to a CNN report.
Major companies are also making it mandatory for their employees to get vaccinated before returning to company campuses. Important names like Google (GOOGL), Facebook (FB), Netflix (NFLX) and BlackRock can be safely added to the list of companies having a vaccine mandate.
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. The fund has AUM of $32.19 billion. It charges 12 bps in fees per year. It carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: 5 Hot Equity ETFs of Last Week to Sizzle on Solid Earnings).