Tags: ETF | investing | fund | February

Zacks: 6 ETFs to Help Weather a February Market Decline

Zacks: 6 ETFs to Help Weather a February Market Decline

(Dreamstime)

By    |   Friday, 03 February 2017 11:25 AM

February can be the cruelest month for stocks after a new president is inaugurated, according to historical data, and Zacks Investment Research has compiled a list of six exchange-traded funds to help investors weather a market drop.

The S&P 500 stock index falls by 3.8 percent on average in February after a new president is inaugurated, according to Bank of America Merrill Lynch.

“The bullish sweet spot of Presidential Cycle Year 1 is March to July, which has an average gain of 7.86 percent (average March to August rally of 11.15 percent for a first-term President),” according to the bank’s analysis.

The market may be due for a period to digest its 7.5 percent gain to record highs after Trump was elected. Meager economic growth and disappointing earnings reports from companies like Exxon Mobil and Amazon.com pressured the Trump rally.

The S&P 500 rose 0.7 percent to 2,297.35on Friday morning after a report showed the U.S. economy added 227,000 new jobs, better than the Wall Street consensus estimate of 180,000. The stock benchmark hit an intraday record of 2,300.99 on January 26.

“The U.S. markets had a steep ascent since Trump's win. Now, the Trump rally seems to be waning,” Zacks said in a SeekingAlpha post. “U.S. GDP growth data for Q4 came in lower than expected. This caused market gyrations to start February and must have stirred investors' hunt for quality investments.”

The U.S. economy grew an annualized 1.9 percent in the fourth quarter, less than the 3.5 percent expansion in the third quarter and a large miss of economist forecasts for 2.2 percent growth.

“All these make it more important to pinpoint ETFs that could safeguard investors from any steep and sudden market swing as well as earn some gains,” Zacks said.

Zacks compiled this list of six ETFs for February:

  1. SPDR Gold Shares (GLD): “A lower greenback and the sudden safe haven demand should brighten up gold bullion, benefiting bullion ETF SPDR Gold Shares.”
  2. PowerShares S&P International Developed Low Volatility Portfolio ETF (IDLV): “A look at developed economies with low volatile focus makes sense.”
  3. Reality Shares DIVCON Dividend Defender ETF (DFND): “The fund invests 75% of its portfolio in large-cap U.S. companies with the highest probability of raising their dividends within a year.”
  4. WisdomTree Emerging Markets Consumer Growth ETF (EMCG) : “Emerging markets (EM) look much better positioned at the current level.”
  5. VanEck Vectors Morningstar Wide Moat ETF (MOAT): This fund calls for exposure to high-quality companies with a strong competitive advantage.
  6. ValueShares U.S. Quantitative Value ETF (QVAL): “The fund is actively managed and employs a systematic procedure to recognize the right stocks for investment.”

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StreetTalk
February can be the cruelest month for stocks after a new president is inaugurated, according to historical data, and Zacks Investment Research has compiled a list of six exchange-traded funds to help investors weather a market drop.
ETF, investing, fund, February
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2017-25-03
Friday, 03 February 2017 11:25 AM
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