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3 ETFs Below $20 That Offer Great Upside Potential
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Most investors want to put their money in equities but may not be able to afford large stakes in valuable companies with higher priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more number of shares instead of just a handful of higher priced stocks for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.
Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1. Further, most of the low-priced stocks have high levels of liquidity that give these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for the investor.
And guess what, the ongoing bull and bear tug-of-war has provided investors great opportunity to tap some of these from a long list. The preference is not only limited to the stock world but can be felt in the ETF space as well. In fact, there are less than 500 ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that choices are pretty good for investors who like to get a decent number of shares from their investment (read: Value ETFs & Stocks to Enrich Your Portfolio Amid Volatility).
So, let us dig into some of the ETFs that are below $20 and have AUM of over $300 million and average daily volume of more than 100,000 shares. These low-priced ETFs could lead to huge gains in the coming months.
Fidelity MSCI Energy Index ETF (FENY - Free Report) – Price: $18.82
The global energy market has been on its way toward balancing, draining out the excess inventory through the historic OPEC output cut deal. Though higher production in the United States seems to be a hurdle, accelerating global economic growth since the financial crisis, with a consumption boom in both developed and emerging markets especially in China, as well as geopolitical uncertainty bode well for the sector.
The fund targets the energy segment of the broader U.S. equity market. It follows the MSCI USA IMI Energy Index, holding 130 stocks in its basket. The product charges 8 bps in annual fees and trades in a volume of around 285,000 shares. It has accumulated $487.1 million in its asset base and has a Zacks ETF Rank #3 with a High risk outlook (read: What Lies Ahead for Oil ETFs?).
The latest February job report has rekindled interest in high dividend ETFs as a slowdown in wage growth eased fears of rising inflation and dismissed chances of faster-than-expected rate hikes. This would provide some relief to high dividend products, which were battered by the recent aggressive stance adopted by the Fed. As a result, these products are positioned to be the biggest potential movers in the weeks ahead. With regard to this, PEY seems to be an excellent choice.
This fund offers exposure to 50 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 54 bps in fees from investors. Utilities, consumer staples, financials, consumer discretionary and energy are the top five sectors accounting for double-digit exposure each. The product has amassed $801.4 million in AUM and sees average daily volume of 157,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 4 Safe Dividend Growth ETFs & Stocks for a Faltering Market).
While rise in yields dulled the shine of the precious metal, trade fears arising from Trump’s protectionist stance, political instability in Washington, and geopolitical tensions raised the appeal for the bullion as a store of value and hedge against market turmoil. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. Hence, mining ETFs like RING could outperform when gold climbs (read: Is Pain in Store for Gold Mining ETFs on Muted Earnings?).
This ETF offers global exposure to companies that derive the majority of their revenues from gold mining by tracking the MSCI ACWI Select Gold Miners Investable Market Index. It holds 34 securities in its portfolio and is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $316.7 million and trades in a good volume of 406,000 shares per day.
Bottom Line
The abovementioned ETFs should draw the attention of investors seeking to accumulate a larger number of low-priced funds that are poised to outperform. Even small investors could add a decent holding of some of these names with a modestly sized investment. These products could fetch higher returns.
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3 ETFs Below $20 That Offer Great Upside Potential
Most investors want to put their money in equities but may not be able to afford large stakes in valuable companies with higher priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more number of shares instead of just a handful of higher priced stocks for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.
Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1. Further, most of the low-priced stocks have high levels of liquidity that give these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for the investor.
And guess what, the ongoing bull and bear tug-of-war has provided investors great opportunity to tap some of these from a long list. The preference is not only limited to the stock world but can be felt in the ETF space as well. In fact, there are less than 500 ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that choices are pretty good for investors who like to get a decent number of shares from their investment (read: Value ETFs & Stocks to Enrich Your Portfolio Amid Volatility).
So, let us dig into some of the ETFs that are below $20 and have AUM of over $300 million and average daily volume of more than 100,000 shares. These low-priced ETFs could lead to huge gains in the coming months.
Fidelity MSCI Energy Index ETF (FENY - Free Report) – Price: $18.82
The global energy market has been on its way toward balancing, draining out the excess inventory through the historic OPEC output cut deal. Though higher production in the United States seems to be a hurdle, accelerating global economic growth since the financial crisis, with a consumption boom in both developed and emerging markets especially in China, as well as geopolitical uncertainty bode well for the sector.
The fund targets the energy segment of the broader U.S. equity market. It follows the MSCI USA IMI Energy Index, holding 130 stocks in its basket. The product charges 8 bps in annual fees and trades in a volume of around 285,000 shares. It has accumulated $487.1 million in its asset base and has a Zacks ETF Rank #3 with a High risk outlook (read: What Lies Ahead for Oil ETFs?).
PowerShares High Yield Equity Dividend Achievers Portfolio (PEY - Free Report) – Price: $17.36
The latest February job report has rekindled interest in high dividend ETFs as a slowdown in wage growth eased fears of rising inflation and dismissed chances of faster-than-expected rate hikes. This would provide some relief to high dividend products, which were battered by the recent aggressive stance adopted by the Fed. As a result, these products are positioned to be the biggest potential movers in the weeks ahead. With regard to this, PEY seems to be an excellent choice.
This fund offers exposure to 50 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 54 bps in fees from investors. Utilities, consumer staples, financials, consumer discretionary and energy are the top five sectors accounting for double-digit exposure each. The product has amassed $801.4 million in AUM and sees average daily volume of 157,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 4 Safe Dividend Growth ETFs & Stocks for a Faltering Market).
iShares MSCI Global Gold Miners ETF (RING - Free Report) – Price: $17.33
While rise in yields dulled the shine of the precious metal, trade fears arising from Trump’s protectionist stance, political instability in Washington, and geopolitical tensions raised the appeal for the bullion as a store of value and hedge against market turmoil. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. Hence, mining ETFs like RING could outperform when gold climbs (read: Is Pain in Store for Gold Mining ETFs on Muted Earnings?).
This ETF offers global exposure to companies that derive the majority of their revenues from gold mining by tracking the MSCI ACWI Select Gold Miners Investable Market Index. It holds 34 securities in its portfolio and is the cheapest choice in the gold mining space, charging just 39 bps in fees and expenses. The fund has been able to manage assets worth $316.7 million and trades in a good volume of 406,000 shares per day.
Bottom Line
The abovementioned ETFs should draw the attention of investors seeking to accumulate a larger number of low-priced funds that are poised to outperform. Even small investors could add a decent holding of some of these names with a modestly sized investment. These products could fetch higher returns.
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 >>