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April Fools’ Day may be gone, but your investments keep on playing games with you, sometimes making you a fool and sometimes a genius. As we are on the first trading day of April, let’s see if there are any investments that won’t let you down this month.
In any case, April is a seasonally strong month for stocks. A consensus carried out from 1950 to 2016 shows that April ended up offering positive stock returns in 46 years and negative returns in 21 years, per moneychimp.com, with an average return of positive 1.34%.
Investors should note that after a stellar start to 2017, the Trump rally wavered in the third month of the year. The President’s inability to pull off the Health Care bill triggered uncertainties over the materialization of his other pro-growth promises. Overall, the mood of the U.S. market was downbeat in March.
This kind of a situation makes it more important to pin point ETFs that can safeguard investors from any protracted fall or sudden market swing. In this vein, investors can take a look at the ETF choices:
Though faltering confidence in Trump’s promises oozed some gas out of the equity rally in March, the Nasdaq-100 stayed afloat. The fund (QQQ - Free Report) based on the index was in the green in March though the other two key ETFs – the S&P 500-based (SPY - Free Report) and the Dow Jones-based (DIA - Free Report) –were in the red.
Trump’s easier tone toward protectionism, solid earnings, compelling valuation, and growing emergence and adoption of technology globally has made this corner a treasure trove. Expected earnings growth for the technology sector for Q1 of 2017 is 10.8% on 7% higher revenues, as per the Earnings Trends published on March 29. The earnings growth rate is the highest among the other industries. Revenue growth expectation is also decent compared with the other sectors (read: Buy Hot Tech ETFs to Avoid Trump Uncertainties).
Due to a looming tax deadline in mid-April, demand for muni bonds may be high this month. Investors should note that munis are safer bets than corporate bonds and yield better than treasuries. Usually the interest income from munis is free of federal tax and occasionally even state taxes, making it particularly intriguing to investors in the high tax cohort, who look to cut their tax burden.
With the interest rate backdrop still being benign and Trump-promised tax cuts seeming to take longer to be effected (if at all takes place), clouds over muni investing appear to be dispersing. In such a scenario, investors can expect gains from XMPT which yields about 5.23% annually.
MSCI Eurozone High Dividend Yield Hedged Equity ETF
Recovering economic fundamentals and less-than-expected political uncertainties (thanks to several important elections and Brexit) made Europe an intriguing bet now. European corporate earnings also had one of the best years since the financial crisis in the recent reporting cycle by improving growth, falling currencies and firming commodity prices.
The fund tends to track the performance of equity securities based in the countries belonging to the European Monetary Union, while seeks to mitigate exposure to fluctuations between the value of the U.S. dollar and the euro. It yields about 3.42% annually while charging 45 bps in fees. Germany, Finland, France and Italy are the top four regions (read: 7 Reasons to Bet on These European ETFs Now).
U.S. GDP for the fourth quarter grew 2.1% compared with the previously reported 1.9%. Plus, the U.S. economy may also log a 1% annualized growth rate in Q1 due to solid durable goods’ orders data in February, if we go by the projection of Atlanta Fed. While this trend can be played with small-cap ETFs that these best reflect the domestic economy, investors should be prepared for a Trump slump too and sudden changes in Fed policies. So, a low volatility and high dividend traits would be beneficial in this capitalization.
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report)
Though the Trump rally seems to have passed its best period, industrial stocks can see a few more days of bull run. The sector enjoys seasonal benefits in April. And the U.S. manufacturing sector is also in decent shape right now. Global economic improvement also point to an expected uptick in demand. The interest rate backdrop is also likely to be moderate in the coming days thanks to the Fed’s not-so-steep rate hike trajectory. All these many be beneficial to the industrial ETF AIRR.
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5 ETFs Not Likely to Fool You in April
April Fools’ Day may be gone, but your investments keep on playing games with you, sometimes making you a fool and sometimes a genius. As we are on the first trading day of April, let’s see if there are any investments that won’t let you down this month.
In any case, April is a seasonally strong month for stocks. A consensus carried out from 1950 to 2016 shows that April ended up offering positive stock returns in 46 years and negative returns in 21 years, per moneychimp.com, with an average return of positive 1.34%.
Investors should note that after a stellar start to 2017, the Trump rally wavered in the third month of the year. The President’s inability to pull off the Health Care bill triggered uncertainties over the materialization of his other pro-growth promises. Overall, the mood of the U.S. market was downbeat in March.
This kind of a situation makes it more important to pin point ETFs that can safeguard investors from any protracted fall or sudden market swing. In this vein, investors can take a look at the ETF choices:
First Trust NASDAQ-100-Tech Sector ETF (QTEC - Free Report)
Though faltering confidence in Trump’s promises oozed some gas out of the equity rally in March, the Nasdaq-100 stayed afloat. The fund (QQQ - Free Report) based on the index was in the green in March though the other two key ETFs – the S&P 500-based (SPY - Free Report) and the Dow Jones-based (DIA - Free Report) –were in the red.
Trump’s easier tone toward protectionism, solid earnings, compelling valuation, and growing emergence and adoption of technology globally has made this corner a treasure trove. Expected earnings growth for the technology sector for Q1 of 2017 is 10.8% on 7% higher revenues, as per the Earnings Trends published on March 29. The earnings growth rate is the highest among the other industries. Revenue growth expectation is also decent compared with the other sectors (read: Buy Hot Tech ETFs to Avoid Trump Uncertainties).
Van Eck CEF Municipal Income ETF (XMPT - Free Report)
Due to a looming tax deadline in mid-April, demand for muni bonds may be high this month. Investors should note that munis are safer bets than corporate bonds and yield better than treasuries. Usually the interest income from munis is free of federal tax and occasionally even state taxes, making it particularly intriguing to investors in the high tax cohort, who look to cut their tax burden.
With the interest rate backdrop still being benign and Trump-promised tax cuts seeming to take longer to be effected (if at all takes place), clouds over muni investing appear to be dispersing. In such a scenario, investors can expect gains from XMPT which yields about 5.23% annually.
MSCI Eurozone High Dividend Yield Hedged Equity ETF
Recovering economic fundamentals and less-than-expected political uncertainties (thanks to several important elections and Brexit) made Europe an intriguing bet now. European corporate earnings also had one of the best years since the financial crisis in the recent reporting cycle by improving growth, falling currencies and firming commodity prices.
The fund tends to track the performance of equity securities based in the countries belonging to the European Monetary Union, while seeks to mitigate exposure to fluctuations between the value of the U.S. dollar and the euro. It yields about 3.42% annually while charging 45 bps in fees. Germany, Finland, France and Italy are the top four regions (read: 7 Reasons to Bet on These European ETFs Now).
PowerShares S&P SmallCap High Dividend Low Volatility Portfolio (XSHD - Free Report)
U.S. GDP for the fourth quarter grew 2.1% compared with the previously reported 1.9%. Plus, the U.S. economy may also log a 1% annualized growth rate in Q1 due to solid durable goods’ orders data in February, if we go by the projection of Atlanta Fed. While this trend can be played with small-cap ETFs that these best reflect the domestic economy, investors should be prepared for a Trump slump too and sudden changes in Fed policies. So, a low volatility and high dividend traits would be beneficial in this capitalization.
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report)
Though the Trump rally seems to have passed its best period, industrial stocks can see a few more days of bull run. The sector enjoys seasonal benefits in April. And the U.S. manufacturing sector is also in decent shape right now. Global economic improvement also point to an expected uptick in demand. The interest rate backdrop is also likely to be moderate in the coming days thanks to the Fed’s not-so-steep rate hike trajectory. All these many be beneficial to the industrial ETF AIRR.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>