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U.S. Government Reopens: Tap High Beta & Momentum ETFs

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After more than a one-month-long impasse, the U.S. federal government is reopening through February 15. A deadlock in passing a spending bill, wherein Trump demanded $5.6 billion funding for a border wall that was being opposed by the Democrats, was mainly the reason for the shutdown.

However, since the gridlock turned out the longest in the U.S. history, President Donald Trump finally reportedly “caved on Friday and agreed to sign a continuing resolution” to reopen the government for the time being.

Industry experts believe that the long-term solution of the current issue seems unlikely. More likely, the negotiations will go on, which could result in further shutdown possibilities. Otherwise they might pass a continuing resolution that would make this entire clash all for nothing (irrespective of an emergency declaration), per

Shutdowns normally lower the economy’s productive work hours and revenues. Private sector companies that deal with the government are likely to have their works halted for the time being. As many as 800,000 federal workers are furloughed, which means consumption could be hit.

Trump advisor Larry Kudlow says the partial government shutdown could hurt first-quarter GDP growth but also noted that the economy will recover immediately. The White House now expects the funding delay to reduce 0.1 percentage point from GDP growth every week it lasted (read: ETF Winners & Losers in One-Month Long Government Shutdown).

Now that the tension related to partial government shutdown has backtracked slightly, the investment world should cheer up. This is especially true with the Fed offering dovish statements in January, the greenback being moderate and the U.S. economy reflecting decent numbers.

In this regard, investors can join the new-found optimism in the market and play high beta and momentum ETFs as long as the trend is alive. 

High Beta ETFs

Beta is directly related to market movement. Notably, high beta funds tend to rise or fall more than the stock market and are thus more volatile. When markets soar, high beta funds experience larger gains than the broader market counterparts and thus, outpace their rivals.

Invesco S&P 500 High Beta Portfolio SPHB

The underlying S&P 500 High Beta Index consists of 100 stocks from the S&P 500 index with the highest sensitivity to market movements, or beta, over the past 12 months. The fund charges 25 bps in fees.

High Momentum ETFs

Momentum investing might be an intriguing idea for those seeking higher returns in a short spell.

Fidelity Momentum Factor ETF FDMO

The Fidelity U.S. Momentum Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies that “exhibit positive momentum signals.” It charges 29 bps in fees.

iShares Edge MSCI USA Momentum Factor ETF (MTUM - Free Report)

This ETF seeks to track the performance of large and mid-cap U.S. stocks exhibiting relatively higher momentum characteristics. The fund charges 15 bps in fees (read: Dovish Fed Minutes Should Boost These ETFs).

Invesco DWA Momentum ETF PDP

The fund looks to track the Dorsey Wright Technical Leaders Index. The fund charges 63 bps in fees.

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