5 High-Beta ETFs & Stocks For A Record Market

Wall Street has been roaring higher with all the three major indices hitting record highs last week. The momentum was driven by trade deal optimism and better-than-expected earnings.

In the latest trade development, the United States agreed to remove tariffs in phases and Beijing is also considering removing restrictions on poultry imports. Per Bloomberg News, the first agreement between the superpowers will be signed in the next few weeks. Meanwhile, of the 403 S&P members that reported Q3 results, 73% of the companies beat EPS estimates and 58.1% beat on revenues. The proportion of these companies beating EPS and revenue estimates is in the historical range.

Additionally, monetary easing policy is also driving the stocks higher. The Fed slashed interest rates three times this year by 25 basis points (bps) each. Lower interest rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth and is thus a boon to the stock market.

While every corner of the market is enjoying this ascent, high-beta ETFs and stocks seem a perfect bet at present.

Why Beta?

Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship to market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates the stock price or fund is less volatile than the market.

That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and thus, outpace the rivals. However, these exhibit a higher level of volatility.

Given this bullishness, investors could find the following ETFs and stocks as intriguing options:

ETF Picks

We have chosen ETFs that are not confined to a specific sector or industry but offer exposure to the broad stock market. Additionally, these have AUM of at least $50 million to ensure better tradability and liquidity.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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