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6 Quality ETFs to Sail Through Uncertain Markets

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Going by its ill repute, September continues to be immensely volatile. All world is looking forward to the September 20-21 Fed meeting and is mulling over the timeline of the rate hike this year. Though chances of a hike are extremely low as the U.S. economy has come up with a host of downbeat data points lately, market watchers are not completely ruling out the possibility, especially given that this is the last Fed meeting before the presidential election.

Meanwhile, consumer sentiment in September dropped to the lowest level since April. Consumers’ outlook on present economic conditions slid to about a one-year low. Retail sales plunged in August for the first time in five months. The sales decline was wider than analyst’s expectation of a 0.1% fall (read: 3 Retail ETFs & Stocks Can Defy Soft Data).

If this was not enough, readings were subdued in the field of manufacturing, service and job data for the month of August. Inflation expectations for 2017 dipped to 2.3% in September from 2.5% in August, as per Bloomberg.

Along with these, there are global growth issues and volatility in oil prices that call for a downtrend following IEA’s recent forecast of a prolonged supply glut (read: ETFs to Watch as IEA Forecasts Weaker Global Oil Demand).

Add Quality to Your Portfolio

In such a scenario, investors can seek safety in high quality stocks and related ETFs. Quality stocks are generally rich in value characteristics like strong return on equity, low earnings variability, higher free cash margins and low debt-to-equity.

Thanks to these above-average and high quality traits, quality ETFs may go a long way in protecting one’s portfolio in turbulent times.  Below we highlight six such quality ETFs that are poised to be on investors’ radar in the coming days.

iShares Edge MSCI USA Quality Factor ETF (QUAL - Free Report)

The fund looks to follow large- and mid-cap U.S. stocks displaying positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage). The 125-stock fund is diversified across sectors with IT, Financials, Health Care, Consumer Discretionary and Consumer Staples having a double-digit exposure each. It charges 15 bps in fees and yields about 1.82% (as of September 16, 2016) (read: Quality ETFs in Focus as Global Growth Issues Spiral).

FlexShares Quality Dividend Index Fund (QDF - Free Report)

The fund looks to provide exposure to the growth potential of U.S. securities while offering dividends. It puts about 18.76% focus on IT, followed by 17.61% on financials, 11.16% on health care and 10.81% on industrials. The fund charges 37 bps in fees and  yields 2.76% annually (as of September 16, 2016) (read: 6 Quality Dividend ETFs for Safety and Income).

SPDR MSCI USA Quality Mix ETF (QUS - Free Report)

This fund offers exposure to stocks that have a combination of value, low volatility and quality factor strategies. Information technology takes the top spot from a sector look while healthcare, consumer discretionary and financials also receives double-digit exposure each. It charges 15 bps in fees per year.

WisdomTree US Quality Dividend Growth ETF (DGRW - Free Report)

The 286-stock fund gives exposure to both growth and quality factors. The fund yields about 2.18% and charges 28 bps in fees. IT, industrials, consumer discretionary, staples and health care have a double-digit exposure to the fund (read: Follow Goldman Sachs' Strategy with These ETFs).

Fidelity Quality Factor ETF (FQAL - Free Report)

Stocks of large- and mid-cap U.S. companies with a relatively higher quality are allowed to enter the fund.

VanEck Vectors Morningstar Wide Moat ETF (MOAT - Free Report)

The fund follows an index which tracks the overall performance of the 20 most attractively priced companies with sustainable competitive advantages. As a result, this fund also calls for quality exposure.

Want more information on the world of ETFs? Make sure to check out the podcast below where we discuss the investing landscape with Kevin O’Leary and Connor O’Brien of O’Shares Investments:

 

 

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