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Secret Santa ETFs That Could Surprise You

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Wall Street is seeing a smooth ride this year as the economy has started recovering from the pandemic lows. Solid corporate earnings, rapid vaccinations as well as the massive stimulus program have acted as the major catalysts for stocks. However, inflation fears and Fed’s taper plans have been weighing on investor sentiment lately. The surge in the Omicron variant of COVID-19 ahead of Christmas and the resultant lockdown measures added to the chaos.

This has made many ETFs attractive, especially those that are Secret Santa ETFs, which could surprise investors with big returns this Christmas, based on the current trends. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report) , WisdomTree Cloud Computing Fund (WCLD - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , Invesco S&P SmallCap Momentum ETF (XSMO - Free Report) and Invesco NASDAQ Internet ETF (PNQI - Free Report) could be the hidden gems heading into a Santa rally week.

These ETFs could be gifts from Secret Santa for investors seeking to participate in the stock market given the historical trends or a Santa rally. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year.

The U.S. economy is on a firmer footing buoyed by recovering job market, higher consumer confidence and rising wages. The central bank plans to buy $60 billion per month of bonds in combined Treasuries and agency mortgage-backed securities starting in January, down from $90 billion in December and 120 billion from the start of the pandemic through November. The move indicates a solid U.S. economy despite higher inflation. The trend suggests that Santa might arrive in the market but with difficulties due inflationary pressures and the fast spread of Omicron (read: Forget Omicron: Tap S&P 500 ETFs for At Least 6% Gains in 2022).

Secret Santa ETFs

The above-mentioned ETFs are down in double digits over the past month on broad market concerns but have the potential to move higher with the Santa rally. This is because these funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting their outperformance.

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report)

First Trust NASDAQ Clean Edge Green Energy Index Fund offers exposure to the companies engaged in manufacturing, development, distribution and installation of emerging clean-energy technologies including, solar photovoltaics, wind power, advanced batteries, fuel cells, and electric vehicles. It tracks the Nasdaq Clean Edge Green Energy Index and holds 60 stocks in its basket.

First Trust NASDAQ Clean Edge Green Energy Index Fund manages assets worth $2.9 billion and charges 60 bps in fees per year. The product trades in an average daily volume of 435,000 shares and has a Zacks ETF Rank #2 with a High risk outlook.

WisdomTree Cloud Computing Fund (WCLD - Free Report)

WisdomTree Cloud Computing Fund offers exposure to emerging and fast-growing U.S.-listed companies (including ADRs) that are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 58 stocks in its basket and charges investors 45 bps in fees per year.

WisdomTree Cloud Computing Fund has amassed $1.1 billion in its asset base and trades in an average daily volume of 332,000 shares. It has a Zacks ETF Rank #2 (read: Why These Tech ETFs Are Bargain Buys).

SPDR S&P Retail ETF (XRT - Free Report)

SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well-diversified 109 stocks in its basket. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in Internet & direct marketing retail, apparel retail, automotive retail and specialty stores.

SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $657.8 million and an average trading volume of 3.2 million shares. It charges 35 bps in annual fees. SPDR S&P Retail ETF has a Zacks ETF Rank #1.

Invesco S&P SmallCap Momentum ETF (XSMO - Free Report)

Invesco S&P SmallCap Momentum ETF offers exposure to companies in the he S&P SmallCap 600 Index having the highest “momentum scores.” It tracks the tracking the S&P Smallcap 600 Momentum Index, holding 116 stocks in its basket.

Invesco S&P SmallCap Momentum ETF has gathered $190.1 million in its asset base and charges 39 bps in annual fees. The fund trades in an average daily volume of 23,000 shares and has a Zacks ETF Rank #2.

Invesco NASDAQ Internet ETF (PNQI - Free Report)

Invesco NASDAQ Internet ETF follows the Nasdaq CTA Internet Index, which measures the performance of companies engaged in Internet-related businesses that are listed on the New York Stock Exchange, NYSE American, Cboe Exchange or The Nasdaq Stock Market. The product holds 82 stocks in its basket (read: Internet ETFs Looking Great Bets Amid Omicron Uncertainty).

Invesco NASDAQ Internet ETF has amassed $937.6 million in its asset base and charges 60 bps in fees per year. The fund trades in a light volume of 17,000 shares and has a Zacks ETF Rank #2 with a High risk outlook.