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Is Bull Market Approaching? ETF Areas to Bet On

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According to Bank of America, the bull market is a few months away, as quoted on MarketWatch. Per history, B. of A. Global Investment Strategy’s chief investment strategist, Michael Hartnett, pointed out that the average peak-to-trough bear-market decline has been 37.3% over a span of 289 days. The S&P 500 is down 23.7% from the all-time high.

Matching that pattern should put the end of the bear market on Oct 19, 2022, according to statistical averages, with the S&P 500 likely bottoming at 3,000. An end typically marks a new beginning, with Bank of America pointing out that the average bull market lasts a much longer 64 months with a 198% return, “so next bull sees the S&P 500 at 6,000 by Feb 28,” said Hartnett, quoted on MarketWatch.

More data from the bank revealed that about $16.6 billion flowed into stocks in the most recent week, $18.5 billion from bonds and $50.1 billion from cash. Also, the data showed that it was the first week of inflows to emerging-market equities in the past six weeks, which was at $1.3 billion. It also marked the biggest inflow to U.S. small-cap stocks since December 2021, which was at $6.6 billion; the largest influx to U.S. value stocks in 13 weeks, at $5.8 billion; and biggest flow toward tech in nine weeks, at $800 million.

No wonder, the signs show a trend reversal. Against this backdrop, below we highlight ETFs that have amassed maximum assets this month (read: Yield Curve Inverts: 4 Value Sector ETFs to Play).

S&P 500: A Safe & Broad-Based Exposure

The S&P 500 is now in the official bear market. Hence, the buy-the-dip strategy is quite pronounced here. iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard S&P 500 ETF (VOO - Free Report) have fetched about $6.23 billion and $5.75 billion in assets this month.

Mid-&-Small-Caps: Small is Big Now

About $3.36 billion in assets and $2.77 billion in assets also flowed into Vanguard Mid-Cap ETF (VO - Free Report) and Vanguard Small-Cap ETF (VB - Free Report) . Small-cap ETF iShares Russell 2000 ETF (IWM) also hauled in about $2.06 billion in assets. This happened despite the recessionary talks in the United States. Notably, smaller-cap stocks fare better in a trending domestic economy as these have solid domestic exposure.

Value ETFs – Large-Mid-Small: Value Lies Here

Vanguard Value ETF (VTV - Free Report) , Vanguard Small-Cap Value ETF (VBR - Free Report) and Vanguard Mid-Cap Value ETF (VOE) amassed about $2.69 billion, $1.77 billion and $1.56 billion, respectively. Value investing makes them gem-like bets amid economic uncertainties, as these have a low price-to-book ratio (P/B) — a measure of market cap relative to tangible assets.

Emerging Markets: A Sigh of Relief?

iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) attracted about $215 million, while KraneShares CSI China Internet ETF (KWEB - Free Report) added about $565.8 million in assets. iShares MSCI China ETF (MCHI - Free Report) has taken in about $855.7 million in assets this month so far. China ETFs were hit hard earlier in the year due to stringent regulatory scrutiny along with tight COVID-control measures and the resultant lockdown. Chinese tech equities started rebounding from late April as the nation’s top political leaders planned on Friday to boost economic stimulus to promote growth. There could also be easing of the continued clampdown on tech firms (read: Time for Chinese Tech ETFs?).

Tables Are Turning for Tech Too

Technology Select Sector SPDR Fund (XLK - Free Report) amassed about $367 million in assets. Ark Investment Management founder Cathie Wood believes the market is quite close to a bottom. Tech stocks will hit a trough and recover first, per CNBC. We all know that tech stocks have been massively hurt this year due to the Fed policy tightening and rising rate worries. However, buy-the-dip strategy and subdued long-term yields have probably turned investors to this beaten-down zone (read: Cathie Wood Sees a Fast Recovery in Tech ETFs: Is It Possible?).


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