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4 ETF Areas for Investors to Make the Most of Q4

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Investors are having a difficult time on Wall Street after a tough September. Apart from increased volatility, market participants are currently grappling with other issues like inflationary pressure, the Fed’s tapering concerns and supply-chain challenges. Investors are on edge regarding earnings growth in the third-quarter earnings season. Going by Refinitiv data, the September-quarter earnings growth rate might come in at 30% from the year-ago reported figure following a 96.3% rise in the second quarter (as mentioned in a CNBC article).

A CNBC Market Strategist Survey reflects that Wall Street major strategists are expecting soft returns for the remainder of 2021 as the average year-end S&P 500 target is 4,433.

In another disappointing development, Goldman Sachs (GS) decreased its U.S. economic growth prediction. The investment bank expects 2022 growth in the range of 4% to 4.4% (according to a CNBC article). It has also revised its 2021 estimate downward to 5.6% from 5.7%. It cited various factors like the diminishing fiscal stimulus support from the Congress and the slow pace of recovery in consumer spending for its decision.

The latest jobs report for September was quite lacklustre as the U.S. economy has added the lowest number of jobs so far this year. 194,000 positions were added in September, which missed the forecast of 500,000. Nonfarm employment has risen 17.4 million since April 2020 but decreased 3.3% from its pre-pandemic level in February 2020.

Against this backdrop, let’s take a look at some ETF areas that are looking decent investment options for the investors to park their money in Q4:

Energy ETFs

The energy sector has been attracting investors’ attention on the latest rally in oil prices. Oil prices crossed the $80-a-barrel mark amid the ongoing global power crisis. The price of crude attained a seven-year high. Shrinking crude inventories, supply disruption in the Gulf of Mexico following a couple of hurricanes and surging fuel demand are pushing oil prices higher.

Soaring coal and natural gas prices in Europe and Asia due to a supply-demand imbalance before the severe winter season is driving consumption of diesel and kerosene (according to a Bloomberg article). TheOrganization of the Petroleum Exporting Countries (OPEC) and a Russia-led group of oil producers, collectively called OPEC+ decided to raise production by 400,000 barrels a day each month. Also, the coronavirus vaccine rollout is gradually aiding in controllingthe spread of the pandemic. The optimism surrounding the gradual reopening of global economies and increasing demand are painting a rosy picture for cyclical sectors.

Considering the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding to your portfolio for boosting returns Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) , Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY) and The Energy Select Sector SPDR Fund (XLE) (read: Here's Why Energy ETFs Are Sizzling With Opportunities).

Dividend ETFs

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 compared 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.

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. As a result, these products deliver an excellent combination of annual dividend growth and capital-appreciation opportunity and are primarily suitable for risk-averse long-term investors.

Against this backdrop, let’s take a look at some ETFs that investors can consider like Vanguard Dividend Appreciation ETF (VIG - Free Report) , SPDR S&P Dividend ETF (SDY - Free Report) , iShares Select Dividend ETF (DVY) and ProShares S&P 500 Dividend Aristocrats ETF (NOBL) (read: September's Weak History Turning True: 5 ETF Buying Zones).

Technology ETFs

Technology has played an instrumental role amid the ongoing COVID-19 uncertainty in aiding people to maintain safe-distancing norms. The work-from-home model has bumped up sales of PCs, laptops and other kinds of computer peripherals as well. Going by IDC’s Worldwide Quarterly Personal Computing Device Tracker, the global shipment of PCs that include laptops and tablets, desktops and notebooks, reached 83.6 million units in the second quarter, rising 13.2% on a year-over-year basis.

Certain other ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming and soaring video game sales. The pandemic has also beena boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.

Further, the semiconductor space has been gaining from expanding digitization and growing dependency on the Internet. In fact, the 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.

Thus, investors could consider ETFs like Vanguard Information Technology ETF (VGT - Free Report) , The Technology Select Sector SPDR Fund (XLK - Free Report) , iShares U.S. Technology ETF (IYW - Free Report) and First Trust NASDAQ-100-Technology Sector Index Fund (QTEC) (read: 5 ETFs & Stocks From the FavoriteSectors of Q3 Earnings).

Retail ETFs

Market analysts are expecting an impressive retail sales figure in 2021 anda strong holiday season. Strengthin consumer sentiment can act as a major growth driver as consumers haveenough resources to splurge this holiday season after facing restrictions for more than a year.

The retailers are prepping for the start to the holiday season (the late October-December period) that is considered a busy season for severalindustry players and market participants. The quarter is marked by some popular retail events like Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas, which increase its significance among retailers.

According to Mastercard SpendingPulse,  U.S. retail sales — excluding automotive and gas — for the “75 Days of Christmas” spanning from Oct 11 to Dec 24 are anticipated to increase 6.8% from the year-earlier tally.

Considering the strong trends, investors may park their money in the retail ETFs like Amplify Online Retail ETF (IBUY - Free Report) , ProShares Online Retail ETF (ONLN - Free Report) , SPDR S&P Retail ETF (XRT) and VanEck Retail ETF (RTH) to tap the sales boom (read: Online Retail ETFs to Gain From Holiday Shopping Craze).

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