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5 Top-Ranked ETF Making Great Investment Options for November

Take a look at some top-ranked ETFs that might help strengthen your portfolio and rake in some good returns.

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This story originally appeared on Zacks

October has been a positive month for the market participants, largely due to the upbeat third-quarter earnings season. November also began with a bang as all three major averages closed at a record for the fourth trading session in a row on Nov 3.

- Zacks

The upside in the market has been driven by the much-anticipated announcements from the Federal Reserve. The central bank has informed about its plan to initiate the tapering of bond purchases “later this month” (according to a CNBC article). The impressive earnings season has also been supporting the market rally. Notably, 80.9% of the S&P 500 companies that reported earnings results have surpassed analysts’ earnings estimates as of Nov 3, per the FactSet data (per a CNBC article).

The ongoing optimism in the market is keeping investors optimistic about the year-end rally. In this regard, Keith Lerner, co-chief investment officer at Truist, has commented that “The primary market trend appears higher. In the eight periods since 1950 where stocks were up more than 20% through October, as they are this year, the S&P 500 tacked on additional gains by year end 100% of the time with an average gain of 6.2%,” as stated in a CNBC article.

Against this backdrop, let’s take a look at some top-ranked ETFs that investors can consider for raking in some good returns:

The Financial Select Sector SPDR Fund XLF

Several factors can be working in favor of the space. The Federal Reserve tapering its monthly bond purchases “later this month” can work for the space. The shift toward a tighter monetary policy will push yields higher, thereby helping the financial sector. This is because rising rates will help in boosting profits for banks, insurance companies, discount brokerage firms and asset managers. Notably, steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to receive support from the steepening of the yield curve and a modest rise in loan demand.

The fund seeks to provide investment results that before fees and expenses correspond generally to the total return performance of the Financial Select Sector Index. It has AUM of $45.50 billion and charges 0.12% in expense ratio. The fund sports a Zacks ETF Rank #1 (Strong Buy), with a Medium risk outlook (read: 4 Sector ETFs & Stocks for Bountiful Returns in November).

Fidelity MSCI Materials Index ETF FMAT

The materials sector has been attracting investor attention as the gradual reopening of U.S. and global economies highlights brighter prospects. Consumer confidence in the United States rose in October primarily on the heels of easing Delta variant concerns, improving labor market conditions, rebounding U.S. economy from the pandemic-led slump and accelerated coronavirus vaccine rollouts.

Consumers seem to be looking forward to buying homes, motor vehicles and major household durables. In fact, the buying attitude for vehicles and homes is expanding. The survey also showed that the proportion of the population planning to go on vacation has shot up to the highest level since February 2020, as mentioned in a Reuters article.

The fund seeks to provide investment results that, before expenses, match the performance of the MSCI USA IMI Materials Index. Its AUM is $493.50 million and expense ratio is 0.08%. The fund sports a Zacks ETF Rank #1, with a Medium risk outlook.

iShares U.S. Healthcare ETF IYH

The pandemic has triggered a race to introduce vaccines and treatment options, opening up investment opportunities in the healthcare sector. Moreover, the space has been gaining attention lately on a spike in COVID-19 infections due to the Delta variant. This has made investors jittery, compelling them to shift toward defensive investments.

The fund seeks to track the performance of the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. It charges investors 41 basis points (bps) in annual fees as stated in the prospectus and has an AUM of $3.01 billion. It carries a Zacks ETF Rank #1, with a Medium-risk outlook.

First Trust Nasdaq Semiconductor ETF FTXL

The semiconductor industry has been increasingly gaining investors' attention backed by its bright prospects. The coronavirus-induced work-from-home and web-based learning trends have spurred demand for chips from PC manufacturers and data-center operators. The increasing importance of Hybrid cloud among enterprises is attracting investments from large public cloud providers, including Amazon Web Services, Microsoft Azure, Google Cloud, International Business Machines and Oracle. The data-center chip providers will likely gain from this trend.

This ETF follows the Nasdaq US Smart Semiconductor Index. It charges 60 bps in fees a year from investors and has an AUM of $93.4 million. It flaunts a Zacks ETF Rank #1 (read: What's in Store for Semiconductor ETFs in Q3 Earnings?).

Vanguard Dividend Appreciation ETF VIG

Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities compared to other products in the space but might not necessarily have the highest yields.

‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward dividend investing has been rising due to easing monetary policy on the global front and market uncertainty triggered by the pandemic and deceleration in global growth.

These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields. As a result, these products deliver an excellent combination of annual dividend growth and capital-appreciation opportunity and are primarily suitable for risk-averse long-term investors.

This ETF follows the S&P U.S. Dividend Growers Index. It charges 6 bps in fees a year from investors and has an AUM of $65.01 billion. It flaunts a Zacks ETF Rank #1, with a Medium-risk outlook (read: 4 ETF Areas for Investors to Make the Most of Q4).



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Financial Select Sector SPDR ETF (XLF): ETF Research Reports

 

iShares U.S. Healthcare ETF (IYH): ETF Research Reports

 

Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports

 

Fidelity MSCI Materials Index ETF (FMAT): ETF Research Reports

 

First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports

 

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Zacks Investment Research