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5 Secret Santa ETFs That Might Surprise You This Christmas
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Wall Street has been sizzling hot this holiday season, with the three major U.S. bourses hitting all-time highs. Speculation that the Fed is done with interest rate hikes and a surge in tech stocks have been the major catalysts. The solid trend is likely to continue, given that the Santa Claus rally is on the way.
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. This looks more real this year, given that the Fed has boosted optimism in the stock market, indicating deeper rate cuts than expected for the next year.
The Fed, in its latest meeting, kept interest rates steady for the third time and penciled in three rate cuts of a total of 75 bps for the next year, compared with the previous forecast of two rate cuts in 2024 (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Against such a backdrop, there are some hidden gems, or Secret Santa as we call them, which could surprise investors with big returns this Christmas. We have chosen five ETFs that have underperformed the market this year but have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). These include iShares U.S. Energy ETF (IYE - Free Report) , WisdomTree U.S. High Dividend Fund (DHS - Free Report) , iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , iShares U.S. Healthcare Providers ETF (IHF - Free Report) and SPDR S&P Dividend ETF (SDY - Free Report) .
With inflation easing and the economy holding up better, the Fed has shifted to a dovish view. The central bank expects the federal funds rate to fall to a range of 4.4-4.9% in 2024, down from the current 5.25% to 5.50%. Markets have been pricing in a nearly 60% chance that the Fed will begin to cut rates at its March meeting, up from 40% the day prior, per the data from CME Group.
Americans are feeling more confident about the economy than they did over the past few months, heading into Christmas. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Retail sales also posted surprise growth in November after declining in the prior month. The data points to resilient consumers and a strong start to the holiday season, justifying that Santa is on the way (read: ETFs Set to Gain Amid Robust Holiday Consumer Sentiment).
We have highlighted the details of each ETF below:
iShares U.S. Energy ETF tracks the Russell 1000 Energy RIC 22.5/45 Capped Gross Index (USD), giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 40 stocks in its basket, with a large concentration on the top two firms.
iShares U.S. Energy ETF charges 40 bps in fees per year from its investors. It has AUM of $1.2 billion and an average daily volume of about 560,000 shares. The product has a Zacks ETF Rank #2 with a High risk outlook (read: Buffett's Favorite 4 Sectors: ETFs in Focus).
WisdomTree U.S. High Dividend Fund (DHS - Free Report) – Down 1.5%
WisdomTree U.S. High Dividend Fund offers exposure to U.S. equity from high dividend-yielding companies by tracking the WisdomTree U.S. High Dividend Index. It holds 385 stocks in its basket, with key holdings in financials, energy, utilities and consumer staples that account for double-digit exposure each.
WisdomTree U.S. High Dividend Fund has amassed $1.1 billion in its asset base and trades in lower volume of around 59,000 shares a day. It charges 38 bps in fees per year and has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report) – Down 0.9%
iShares U.S. Pharmaceuticals ETF provides exposure to 34 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index.
iShares U.S. Pharmaceuticals ETF has $589 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 18,000 shares a day. The fund carries a Zacks ETF Rank #2 with a High risk outlook.
iShares U.S. Healthcare Providers ETF (IHF - Free Report) - Down 0.4%
iShares U.S. Healthcare Providers ETF provides exposure to companies that offer health insurance, diagnostics and specialized treatment. It follows the Dow Jones U.S. Select Healthcare Providers Index and holds 698 securities in its basket.
iShares U.S. Healthcare Providers has amassed $928.7 million in its asset base and charges 40 bps in annual fees. Volume is good at about 17,000 shares per day, on average. The product has a Zacks ETF Rank #2 with a Medium risk outlook.
With AUM of $20.5 billion, SPDR S&P Dividend ETF provides well-diversified exposure to 121 U.S. stocks that have consistently increased their dividend for at least 20 consecutive years. This can be done by tracking the S&P High Yield Dividend Aristocrats Index. Industrials and consumer staples are the top two sectors with 21% allocation each.
SPDR S&P Dividend ETF charges 35 bps in fees and trades in an average daily of 527,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
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5 Secret Santa ETFs That Might Surprise You This Christmas
Wall Street has been sizzling hot this holiday season, with the three major U.S. bourses hitting all-time highs. Speculation that the Fed is done with interest rate hikes and a surge in tech stocks have been the major catalysts. The solid trend is likely to continue, given that the Santa Claus rally is on the way.
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. This looks more real this year, given that the Fed has boosted optimism in the stock market, indicating deeper rate cuts than expected for the next year.
The Fed, in its latest meeting, kept interest rates steady for the third time and penciled in three rate cuts of a total of 75 bps for the next year, compared with the previous forecast of two rate cuts in 2024 (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Against such a backdrop, there are some hidden gems, or Secret Santa as we call them, which could surprise investors with big returns this Christmas. We have chosen five ETFs that have underperformed the market this year but have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). These include iShares U.S. Energy ETF (IYE - Free Report) , WisdomTree U.S. High Dividend Fund (DHS - Free Report) , iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , iShares U.S. Healthcare Providers ETF (IHF - Free Report) and SPDR S&P Dividend ETF (SDY - Free Report) .
With inflation easing and the economy holding up better, the Fed has shifted to a dovish view. The central bank expects the federal funds rate to fall to a range of 4.4-4.9% in 2024, down from the current 5.25% to 5.50%. Markets have been pricing in a nearly 60% chance that the Fed will begin to cut rates at its March meeting, up from 40% the day prior, per the data from CME Group.
Americans are feeling more confident about the economy than they did over the past few months, heading into Christmas. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Retail sales also posted surprise growth in November after declining in the prior month. The data points to resilient consumers and a strong start to the holiday season, justifying that Santa is on the way (read: ETFs Set to Gain Amid Robust Holiday Consumer Sentiment).
We have highlighted the details of each ETF below:
iShares U.S. Energy ETF (IYE - Free Report) – Down 5.1%
iShares U.S. Energy ETF tracks the Russell 1000 Energy RIC 22.5/45 Capped Gross Index (USD), giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 40 stocks in its basket, with a large concentration on the top two firms.
iShares U.S. Energy ETF charges 40 bps in fees per year from its investors. It has AUM of $1.2 billion and an average daily volume of about 560,000 shares. The product has a Zacks ETF Rank #2 with a High risk outlook (read: Buffett's Favorite 4 Sectors: ETFs in Focus).
WisdomTree U.S. High Dividend Fund (DHS - Free Report) – Down 1.5%
WisdomTree U.S. High Dividend Fund offers exposure to U.S. equity from high dividend-yielding companies by tracking the WisdomTree U.S. High Dividend Index. It holds 385 stocks in its basket, with key holdings in financials, energy, utilities and consumer staples that account for double-digit exposure each.
WisdomTree U.S. High Dividend Fund has amassed $1.1 billion in its asset base and trades in lower volume of around 59,000 shares a day. It charges 38 bps in fees per year and has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report) – Down 0.9%
iShares U.S. Pharmaceuticals ETF provides exposure to 34 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index.
iShares U.S. Pharmaceuticals ETF has $589 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 18,000 shares a day. The fund carries a Zacks ETF Rank #2 with a High risk outlook.
iShares U.S. Healthcare Providers ETF (IHF - Free Report) - Down 0.4%
iShares U.S. Healthcare Providers ETF provides exposure to companies that offer health insurance, diagnostics and specialized treatment. It follows the Dow Jones U.S. Select Healthcare Providers Index and holds 698 securities in its basket.
iShares U.S. Healthcare Providers has amassed $928.7 million in its asset base and charges 40 bps in annual fees. Volume is good at about 17,000 shares per day, on average. The product has a Zacks ETF Rank #2 with a Medium risk outlook.
SPDR S&P Dividend ETF (SDY - Free Report) – Up 1.6%
With AUM of $20.5 billion, SPDR S&P Dividend ETF provides well-diversified exposure to 121 U.S. stocks that have consistently increased their dividend for at least 20 consecutive years. This can be done by tracking the S&P High Yield Dividend Aristocrats Index. Industrials and consumer staples are the top two sectors with 21% allocation each.
SPDR S&P Dividend ETF charges 35 bps in fees and trades in an average daily of 527,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.