5 Top ETFs With Great Value & More Room for Growth
The S&P 500 has been in a great shape this year, calling for overvaluation concerns. Why not investing in ETFs that have underperformed the S&P 500, h...
The S&P 500 has been in a great shape this year having returned about 20.7%. The S&P 500 booked an awesome August and logged the best year-to-date performance since 1997, per a MarketWatch article. Longtime market bull Tom Lee is predicting a profitable period for investors in September too, though alarming signs are flashing for October, as quoted in a CNBC article.
The Fundstrat Global Advisors’ co-founder and head of research told CNBC’s “Trading Nation” on Friday, “We didn’t think there was a window for a 10% correction for most of 2021. The window where we think you could start to have potentially a 10% pullback is October.” The susceptibility to rising fiscal and monetary policy risks — as well as uncertainty surrounding the pandemic and flu season — may create chaos in the market.
No wonder, investors need to be mindful about their investment decisions. How about investing in ETFs that have underperformed the S&P 500 (up 20%) this year, have a lower P/E than that of the S&P 500 and have a Zacks ETF Rank #2 (Buy)? These have chances of outperforming ahead.
ETFs in Focus
VanEck Israel ETF ISRA – Up 10.4% YTD; P/E: 18.32X
The coronavirus pandemic has taken the tech sector to a new height. The requirement of social distancing changed the consumer lifestyle to a purely digital one. The work-learn-shop-and-entertainment from home trend made tech stocks investors’ darlings since last year.
The 112-stock Israel ETF is one such tech bet. Information Technology (41.3%) takes the top spot in the fund. The underlying BlueStar Israel Global Index comprises equity securities, which may include depositary receipts, of publicly traded companies that are generally considered by the Index Provider to be Israeli companies. The fund charges 60 bps in fees.
Israel takes the top spot at 70.15%, followed by the United States (27.50%). Here also, Nice Ltd (6.13%) takes the top spot, followed by Solaredge (5.62%) and Check Point Software Technologies (5.60%) (read: Buy 3 Country ETFs to Tap the Tech Boom).
Schwab U.S. SmallCap ETF SCHA – Up 19.47% YTD; P/E: 18.70X
The Dow Jones U.S. Small-Cap Total Stock Market Index includes the small-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. U.S. economic data points are coming in mixed. While the manufacturing data came in upbeat, jobs data disappointed. However, downbeat jobs data means prolonged policy easing, which should boost the domestically focused small-cap stocks. Growing vaccination is also another plus.
SPDR S&P Biotech ETF XBI – Down 4.77% YTD; P/E: 14.77X
Things have turned bullish for the biotech space of late. The pandemic triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the biotech sector. The FDA’s first full U.S. approval to Pfizer (PFE) /BioNTech’s (BNTX) coronavirus vaccine, Comirnaty (BNT162b) has brought optimism to the space. Moreover, a Reuters report stated that the U.S. government recently announced plans to make COVID-19 vaccine booster shots available starting Sep 20 (read: Top ETF Stories of August).
iShares Currency Hedged MSCI Japan ETF HEWJ — Up 15.35% YTD; P/E: 16.77X
After underperforming for several months, Japan stocks have gained momentum lately on hopes of a stronger government ahead of a ruling party leadership race and a general election in November. The resignation of Prime Minister Yoshihide Suga has opened the door for the new government, which will likely unveil an economic package to support pandemic-hit businesses and families. As such, the move has spurred bets for strong economic recovery by the end of the year. Notably, the Japan Topix Index climbed to the highest level since April 1991 and has been outperforming its Asian peers in recent weeks.
SPDR Dow Jones Industrial Average ETF DIA — Up 18.31% YTD; P/E: 18.51X
This is a laggard in the big trio U.S. indexes. However, if there comes a re-opening friendly movement in the stock market, the Dow Jones should the gain the most. With any positive news on the vaccine and the pandemic front, the Dow Jones would soar.
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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
SPDR S&P Biotech ETF (XBI): ETF Research Reports
iShares Currency Hedged MSCI Japan ETF (HEWJ): ETF Research Reports
Schwab U.S. SmallCap ETF (SCHA): ETF Research Reports
VanEck Israel ETF (ISRA): ETF Research Reports
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