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Buy High-Beta & Momentum ETFs on US-EU Trade Truce
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Wall Street rebounded on Jul 25, as the United States and European Union agreed to reconcile on trade and lower trade barriers. There was an important discussion between President Donald Trump and the European Commission chief Jean-Claude Juncker, following which the announcement of a treaty was made.
The Trump administration imposed a 25% tariff on steel imports and 10% on aluminum imports from some countries including the EU. There were also threats from the Washington to the European car industry (read: U.S. Auto Tariff Risk Put These ETFs and Stocks in Focus).
Investors should note that U.S. soybeans were under pressure thanks to Sino retaliations to U.S. tariffs. China purchases about half of U.S. soybean and its 25% tariff on U.S. soybean imports made the investing situation difficult for the crop. But the latest EU deal appears as a stress reliever (read: US Farm Belt at Risk on China Tariffs: ETFs in Focus).
Apart from this improvement on the trade front, earnings so far this season have been upbeat. About 29% of companies (40.9% of the market cap) in the S&P 500 have released quarterly results, with earnings up about 23.3% and revenues growing 9.1%, per the Earnings Trends issued on Jul 25. This further boosted sentiments in the market.
Three big ETFs SPDR S&P 500 ETF (SPY - Free Report) (up 0.9% on Jul 25), SPDR Dow Jones Industrial Average ETF (DIA - Free Report) (up 0.7% on Jul 25) and Invesco QQQ Trust (QQQ - Free Report) (up 1.4%) were in the green. This makes it necessary to look at some high-beta and high-momentum ETFs on easing tensions between the EU and the United States.
High Beta ETFs in Focus
Though the road ahead could face occasional worries, investors can play receding tensions in the market through high beta ETFs at this moment. 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.
The 99-stock fund looks to track the S&P 500 High Beta Index. The index is compiled, maintained and calculated by Standard & Poor's and consists of the 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.
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. The fund gained about 1.3% on Jul 25 (see all large-cap ETFs here).
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. The fund was up 0.3% on Jul 25.
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Buy High-Beta & Momentum ETFs on US-EU Trade Truce
Wall Street rebounded on Jul 25, as the United States and European Union agreed to reconcile on trade and lower trade barriers. There was an important discussion between President Donald Trump and the European Commission chief Jean-Claude Juncker, following which the announcement of a treaty was made.
The Trump administration imposed a 25% tariff on steel imports and 10% on aluminum imports from some countries including the EU. There were also threats from the Washington to the European car industry (read: U.S. Auto Tariff Risk Put These ETFs and Stocks in Focus).
But now the duo would work toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto goods, if we go by an article published on BBC. Per the source, both parties also conformed to increasing trade in services and agriculture, including liquefied natural gas and US soy bean exports to the EU (read: Tariffs Likely to Dent US Earnings: ETFs in Focus).
Investors should note that U.S. soybeans were under pressure thanks to Sino retaliations to U.S. tariffs. China purchases about half of U.S. soybean and its 25% tariff on U.S. soybean imports made the investing situation difficult for the crop. But the latest EU deal appears as a stress reliever (read: US Farm Belt at Risk on China Tariffs: ETFs in Focus).
Apart from this improvement on the trade front, earnings so far this season have been upbeat. About 29% of companies (40.9% of the market cap) in the S&P 500 have released quarterly results, with earnings up about 23.3% and revenues growing 9.1%, per the Earnings Trends issued on Jul 25. This further boosted sentiments in the market.
Three big ETFs SPDR S&P 500 ETF (SPY - Free Report) (up 0.9% on Jul 25), SPDR Dow Jones Industrial Average ETF (DIA - Free Report) (up 0.7% on Jul 25) and Invesco QQQ Trust (QQQ - Free Report) (up 1.4%) were in the green. This makes it necessary to look at some high-beta and high-momentum ETFs on easing tensions between the EU and the United States.
High Beta ETFs in Focus
Though the road ahead could face occasional worries, investors can play receding tensions in the market through high beta ETFs at this moment. 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.
ETF Picks
Invesco S&P 500 High Beta Portolio (SPHB - Free Report)
The 99-stock fund looks to track the S&P 500 High Beta Index. The index is compiled, maintained and calculated by Standard & Poor's and consists of the 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.
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. The fund gained about 1.3% on Jul 25 (see all large-cap ETFs here).
Invesco DWA Momentum ETF (PDP - Free Report)
The fund looks to track the Dorsey Wright Technical Leaders Index. It charges 63 bps in fees and advanced about 0.8% on Jul 25.
Fidelity Momentum Factor ETF (FDMO - Free Report)
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. The fund was up 0.3% on Jul 25.
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 >>