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10-Year Bull Market to Rage Ahead in 2019: 10 ETF Bets

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The U.S. equity bull market completes 10 years tomorrow. On Mar 7, 2009, the S&P 500 touched a bear market nadir of 666.79, only to stage an astral rally. The run is the longest ever and the “the king of all bull markets.”

Over the last decade, the global investing backdrop has witnessed various key happenings. These include the subprime mortgage crisis, the fall of the investment bank Lehman Brothers in September 2008, the United States losing its triple-A credit rating, the Fed’s QE to boost an economy in recession, the Euro zone debt crisis, Abenomics in Japan, the Taper Tantrum in the United States, China’s soft landing issues, oil price massacre, initiation of QE by ECB, Brexit, the start of Trump era, U.S.-China trade tensions and more such things.

The net result is that the global economy is on a moderate footing now. Though there are no recessionary fears right now, slowdown concerns are rife.

How Was the Journey in the Last Decade?

The S&P 500, which declined about 47% from Mar 9, 2008 to Mar 9, 2009, gained about 386.8% in the last 10 years (as of Mar 7, 2019). SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) and Invesco QQQ Trust QQQ were up 384.3% and 617.8%, respectively, in the last 10 years.

Will Bulls Keep Running in 2019?

We do believe that 2019 should be a year for stocks as dovish central banks amid slowing global economy will keep pumping cheap money into the economy. Last year’s trade tensions have eased considerably this year with cues of improvement in the U.S.-China trade relation. However, as markets have rallied ahead of any concrete trade deal in early-2019, the real news may not boost markets as much as expected.

Against this backdrop, we would like to note a few ETFs that could be good picks for 2019.

iShares Edge MSCI USA Quality Factor ETF QUAL

The fund picks stocks through three fundamental variables: return on equity, earnings variability and debt-to-equity. The fund, in fact, outperformed the S&P 500 by a slight margin this year.

Vanguard Dividend Appreciation ETF VIG

This is yet another quality exposure. Funds that focus on stocks with consistent dividend growth are likely to outperform in troubled times (read: A Dividend ETF Investing Guide).  

iShares US Dividend and Buyback ETF DIVB

Shareholder value maximization played great roles in pushing markets higher over the past decade. Buybacks have shown an improving trend since 2009 and finally beat capital expenditure last year for the first time since 2008, per the source. The trend has been pretty favorable for dividends too. It says that such activities will continue to benefit markets.

Vanguard ESG U.S. Stock ETF ESGV

The ESG investing theme has been pretty popular of late. Investors appear to be bothered about the future of the environment and the effect it might have on their investing portfolio. This is because lesser focus on environmental issues by the companies may result in lawsuits, fines and damages, per the source. The fund charges a low expense ratio of 12 bps in the space.

Oppenheimer Russell 2000 Dynamic Multifactor ETF OMFS

Small-caps were outperforming a year before the economic downturn. Based on Morningstar data compiled by Wells Fargo, as quoted on Forbes, average returns for small-cap stocks were higher than large-caps. So, investors can definitely try out this small-cap ETF. This is especially true given small-caps are more exposed to a faster-growing U.S. economy.

iShares US Insurance ETF IAK

Along with Deloitte, we believe continued economic growth, rising long-term interest rates and the likelihood of higher investment income should drive insurers this year.

SPDR S&P Software & Services ETF XSW

Rising demand for emerging technologies and rising spending on enterprise software, especially cloud (per Gartner), should make the space a winner. Gartner projects a 3.2% uptick in global IT spending to $3.77 trillion in 2019 (read: Wall Street's Best Start Since 1987: Top ETFs of Top Sectors).

iShares US Aerospace & Defense ETF ITA

This is one of the most dependable areas for investors. Growing demand from emerging markets and rising geopolitical tensions are likely hold the sector up. The fund can benefit specifically if there is a trade deal (read: 10 ETF Areas to Gain as Trump Delays Additional Tariffs).

iShares Currency Hedged MSCI Germany ETF HEZU

The Euro zone is slowing down. Most recently, the ECB predicted that Eurozone GDP would increase only 1.1% in 2019, 0.7 percentage points down from its December 2018 prediction. The bank also revamped a stimulus program of cheap loans to bolster the economy. An ultra-easy monetary policy is thus expected to be there in 2019 and benefit currency-hedged ETFs like HEZU.

ETFMG Alternative Harvest ETF MJ

Though it is a risky bet, investors can keep this marijuana ETF in its portfolio just because of its growing acceptance in almost every sphere of life. Be it medical, food and beverage or cosmetics, marijuana is making its presence felt (read: Why Marijuana ETFs & Stocks Have More Room to Run).

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