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The month of August started on a volatile note for Wall Street. Investors are waiting for more updates on stimulus talks from Congress as the previous one has expired. Some foresee less-than-expected fiscal stimulus from the government.
Meanwhile, economic data have been coming in mixed (not fully downbeat despite rising virus cases) and showing signs of economic improvement. Corporate earnings have also been coming in mostly satisfactory.
However, markets have started doubting that Congress will approve enough stimulus to provide satisfactory benefits, leading the Federal Reserve to boost its balance sheet, said Lee Ferridge, head of North America macro strategy for State Street Global Markets, as quoted on Reuters.
Plus, a lot depends on COVID-19 vaccine and treatments. If things go well in the month on the vaccine and stimulus fronts, we could see a rally in markets. Otherwise safe-assets may prevail. In any case, August is downbeat for Wall Street.
A consensus carried out from 1950 to 2019 shows that August ended up offering positive stock returns in 38 years and negative returns in 32 years, per moneychimp.com, with an average return of negative 0.26%. Against this scenario, we highlight a few ETFs that could be apt for investing gains in August.
As per Equityclock, healthcare enjoys seasonal strength in August. This sector is less ruffled by economic fluctuations due to its non-cyclical nature. Healthcare provides a defensive tilt to the fund’s portfolio in a volatile market caused by trade war fears. Also, a huge push for vaccines and treatments should help the fund in the month.
Precious metals, ranging from silver, gold, platinum and palladium, all have been staging a rally. A weaker dollar is aiding the increment. Silver has especially been on a stellar ride with futures prices climbing to the highest level in nearly seven years.
Increase in investment demand, pick-up in industrial activity due to factory reopening after lockdowns, and investors’ appetite for alternatives to the safe-haven asset gold (which is pretty pricey at the current level) led to the rally (read: Here's Why Silver Outshining Gold ETFs).
In a bid to safety, a look at dividend-focused quality ETFs also makes sense. The fund SCHD measures the performance of high dividend-yielding U.S. stocks that have a record of consistently paying out dividends. Since bond yields in the United States have plunged to extremely low levels, investors may find SCHD an intriguing bet. It yields 3.35% annually (read: Is 60/40 Rule Obsolete Now? 5 High-Yielding ETFs to Play).
Investors will definitely want to know about ways that could save them in case of a widespread market selloff and rising volatility. Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios.
The underlying ISE High Income Index comprises 30 closed-end funds ranked the highest overall by the ISE in three criteria: fund yield, discount to net asset value and liquidity. The fund yields 10.55% annually (read: 5 Multi-Asset ETFs for 2H of 2020).
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN - Free Report)
Clean energy seems to be an emerging space. “Growing consumer electric vehicle adoption, state expansions of charging infrastructure, falling battery prices and increased solar-storage installations” have acted as a tailwind for the U.S. clean energy sector over the past few quarters. Most recently, BP plc also reduced its oil and gas output plan by 40% and boosted investments in renewable energy (read: Top ETF Stories of July).
Semiconductor stocks and ETFs should gain ahead from a number of areas like the soaring video gaming industry, a bounce-back in bitcoin and an all overall pickup in technology stocks amid the pandemic.
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6 ETF Picks for Historically Downbeat August
The month of August started on a volatile note for Wall Street. Investors are waiting for more updates on stimulus talks from Congress as the previous one has expired. Some foresee less-than-expected fiscal stimulus from the government.
Meanwhile, economic data have been coming in mixed (not fully downbeat despite rising virus cases) and showing signs of economic improvement. Corporate earnings have also been coming in mostly satisfactory.
However, markets have started doubting that Congress will approve enough stimulus to provide satisfactory benefits, leading the Federal Reserve to boost its balance sheet, said Lee Ferridge, head of North America macro strategy for State Street Global Markets, as quoted on Reuters.
Plus, a lot depends on COVID-19 vaccine and treatments. If things go well in the month on the vaccine and stimulus fronts, we could see a rally in markets. Otherwise safe-assets may prevail. In any case, August is downbeat for Wall Street.
A consensus carried out from 1950 to 2019 shows that August ended up offering positive stock returns in 38 years and negative returns in 32 years, per moneychimp.com, with an average return of negative 0.26%. Against this scenario, we highlight a few ETFs that could be apt for investing gains in August.
Invesco DWA Healthcare Momentum ETF (PTH)
As per Equityclock, healthcare enjoys seasonal strength in August. This sector is less ruffled by economic fluctuations due to its non-cyclical nature. Healthcare provides a defensive tilt to the fund’s portfolio in a volatile market caused by trade war fears. Also, a huge push for vaccines and treatments should help the fund in the month.
iShares Silver Trust (SLV)
Precious metals, ranging from silver, gold, platinum and palladium, all have been staging a rally. A weaker dollar is aiding the increment. Silver has especially been on a stellar ride with futures prices climbing to the highest level in nearly seven years.
Increase in investment demand, pick-up in industrial activity due to factory reopening after lockdowns, and investors’ appetite for alternatives to the safe-haven asset gold (which is pretty pricey at the current level) led to the rally (read: Here's Why Silver Outshining Gold ETFs).
Schwab U.S. Dividend Equity ETF (SCHD - Free Report)
In a bid to safety, a look at dividend-focused quality ETFs also makes sense. The fund SCHD measures the performance of high dividend-yielding U.S. stocks that have a record of consistently paying out dividends. Since bond yields in the United States have plunged to extremely low levels, investors may find SCHD an intriguing bet. It yields 3.35% annually (read: Is 60/40 Rule Obsolete Now? 5 High-Yielding ETFs to Play).
Amplify High Income ETF (YYY - Free Report)
Investors will definitely want to know about ways that could save them in case of a widespread market selloff and rising volatility. Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios.
The underlying ISE High Income Index comprises 30 closed-end funds ranked the highest overall by the ISE in three criteria: fund yield, discount to net asset value and liquidity. The fund yields 10.55% annually (read: 5 Multi-Asset ETFs for 2H of 2020).
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN - Free Report)
Clean energy seems to be an emerging space. “Growing consumer electric vehicle adoption, state expansions of charging infrastructure, falling battery prices and increased solar-storage installations” have acted as a tailwind for the U.S. clean energy sector over the past few quarters. Most recently, BP plc also reduced its oil and gas output plan by 40% and boosted investments in renewable energy (read: Top ETF Stories of July).
VanEck Vectors Semiconductor ETF (SMH - Free Report)
Semiconductor stocks and ETFs should gain ahead from a number of areas like the soaring video gaming industry, a bounce-back in bitcoin and an all overall pickup in technology stocks amid the pandemic.
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 >>