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Your investments often seem to play games with you, sometimes making you feel like a fool and at other times, a genius. As we enter the first trading day of April, let's see if there are any investments that won't let you down and make you feel foolish this month.
In any case, April is a seasonally strong month for stocks. A consensus carried out from 1950 to 2023 shows that April ended up offering positive stock returns in 52 years and negative returns in 22 years, per moneychimp.com, with an average return of positive 1.45%.
Investors should note that after a stellar start to 2024, the longevity of the Wall Street rally is now questionable. This is especially true given the fact that the U.S. economy has seen hot inflation numbers for the first two months of the year, which may deter the Fed to cut rates soon.
But then, the S&P 500 has hit a record 20 times this year on the back of secular bullish trend. The S&P 500 has also logged fifth straight monthly advance – a signal that stocks may be on track for even further gains.
When we look at similar stretches throughout history in which the S&P 500 advanced five months in a row (from November through March), forward returns appear quite alluring – an average of 1.9% gains in April. About 81.8% times, the index went higher in April.
Against this backdrop, investors can take a look at the below-mentioned ETF choices:
The fund is 11.6% up in the first quarter on cues of steepening of the yield curve. With the Fed likely to cut rates this year, short-term rates are likely to dive. Meanwhile, an improving economy and risk-on trade sentiments would push up long-term rates, resulting in higher interest rate margin. This situation is a plus for financial stocks. The fund is currently on high momentum.
The year 2024 comes as a period of strong growth and high demand for the oil and gas industry. WTI crude prices have risen above the $80 mark owing to a combination of factors contributing to a tighter global supply. Geopolitical tensions in the Middle East and an escalating conflict between Russia and Ukraine after the Crocus City Hall terrorist attack have had a significant impact on this upward trend.
If several economies along with the U.S. Fed start to cut rates this year, the demand picture too may brighten up. Plus, the reduction in the number of rigs in the United States adds to the upward pressure on oil prices, making energy stock investing a lucrative case right now. The fund PXJ is up 7.6% past month.
iShares U.S. Home Construction ETF (ITB - Free Report) – Zacks Rank #3 (Hold)
The U.S. homebuilding sector is showing signs of improvement. In February, existing home sales in the United States jumped 9.5%, reaching an annualized rate of 4.38 million. Economists polled by Reuters had forecast home resales would fall to a rate of 3.94 million units. Increased sales despite high home prices is a positive indication for the business.
Also, the housing market has now entered the key spring selling season, which is considered the peak time for home sellers. Normally, the season starts in March and lasts through May-June thanks to warmer weather after a chilly winter and buyers’ inclination to move to a new house before the next school calendar starts.
U.S. homebuilders are now feeling more confident than they have since last summer. Moreover, likely Fed rate cuts should drag down mortgage rates – another tailwind for the homebuilding space.
With the U.S. economic growth in solid shape, smaller size stocks should do well in the near term. Mid-caps offer the best of both worlds – large and small. While it offers greater stability than small-caps, it has higher chances of growth than large-caps (if the economic landscape permits). The fund is up 23.6% this year and charges 35 bps in fees.
One of the primary benefits of dividend investing is the steady stream of income generated through dividend payouts. If the Fed cuts rates ahead, investors will need more sources of high current income. This income generation is possible by investing in VYM. The fund charges only 6 bps in fees and yields 2.82% annually. The fund has added 7.7% in Q1 and is up 1% past week.
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5 ETFs Not Likely to Make You a Fool in April
Your investments often seem to play games with you, sometimes making you feel like a fool and at other times, a genius. As we enter the first trading day of April, let's see if there are any investments that won't let you down and make you feel foolish this month.
In any case, April is a seasonally strong month for stocks. A consensus carried out from 1950 to 2023 shows that April ended up offering positive stock returns in 52 years and negative returns in 22 years, per moneychimp.com, with an average return of positive 1.45%.
Investors should note that after a stellar start to 2024, the longevity of the Wall Street rally is now questionable. This is especially true given the fact that the U.S. economy has seen hot inflation numbers for the first two months of the year, which may deter the Fed to cut rates soon.
But then, the S&P 500 has hit a record 20 times this year on the back of secular bullish trend. The S&P 500 has also logged fifth straight monthly advance – a signal that stocks may be on track for even further gains.
When we look at similar stretches throughout history in which the S&P 500 advanced five months in a row (from November through March), forward returns appear quite alluring – an average of 1.9% gains in April. About 81.8% times, the index went higher in April.
Against this backdrop, investors can take a look at the below-mentioned ETF choices:
Financial Select Sector SPDR ETF (XLF - Free Report) – Zacks Rank #1 (Strong Buy)
The fund is 11.6% up in the first quarter on cues of steepening of the yield curve. With the Fed likely to cut rates this year, short-term rates are likely to dive. Meanwhile, an improving economy and risk-on trade sentiments would push up long-term rates, resulting in higher interest rate margin. This situation is a plus for financial stocks. The fund is currently on high momentum.
Invesco Oil & Gas Services ETF (PXJ - Free Report) – Zacks Rank #2 (Buy)
The year 2024 comes as a period of strong growth and high demand for the oil and gas industry. WTI crude prices have risen above the $80 mark owing to a combination of factors contributing to a tighter global supply. Geopolitical tensions in the Middle East and an escalating conflict between Russia and Ukraine after the Crocus City Hall terrorist attack have had a significant impact on this upward trend.
If several economies along with the U.S. Fed start to cut rates this year, the demand picture too may brighten up. Plus, the reduction in the number of rigs in the United States adds to the upward pressure on oil prices, making energy stock investing a lucrative case right now. The fund PXJ is up 7.6% past month.
iShares U.S. Home Construction ETF (ITB - Free Report) – Zacks Rank #3 (Hold)
The U.S. homebuilding sector is showing signs of improvement. In February, existing home sales in the United States jumped 9.5%, reaching an annualized rate of 4.38 million. Economists polled by Reuters had forecast home resales would fall to a rate of 3.94 million units. Increased sales despite high home prices is a positive indication for the business.
Also, the housing market has now entered the key spring selling season, which is considered the peak time for home sellers. Normally, the season starts in March and lasts through May-June thanks to warmer weather after a chilly winter and buyers’ inclination to move to a new house before the next school calendar starts.
U.S. homebuilders are now feeling more confident than they have since last summer. Moreover, likely Fed rate cuts should drag down mortgage rates – another tailwind for the homebuilding space.
Invesco S&P MidCap 400 Pure Growth ETF (RFG - Free Report) – Zacks Rank #2
With the U.S. economic growth in solid shape, smaller size stocks should do well in the near term. Mid-caps offer the best of both worlds – large and small. While it offers greater stability than small-caps, it has higher chances of growth than large-caps (if the economic landscape permits). The fund is up 23.6% this year and charges 35 bps in fees.
Vanguard High Dividend Yield ETF (VYM - Free Report) – Zacks Rank #2
One of the primary benefits of dividend investing is the steady stream of income generated through dividend payouts. If the Fed cuts rates ahead, investors will need more sources of high current income. This income generation is possible by investing in VYM. The fund charges only 6 bps in fees and yields 2.82% annually. The fund has added 7.7% in Q1 and is up 1% past week.