6 ETF Trends Likely To Take Center Stage In 2017

Donald Trump’s win as the U.S. President and the most sought-after OPEC output deal has actually set the tone of 2017 investing. Many are bullish on the prospect of oil price this year though rising U.S. supplies can anytime thwart the winning momentum in the oil patch. However, Trump-backed hopes are still in fine fettle.

Added to these, there are plenty of other events – across asset class and regions – that could prove to be game-changers this year. In view of this, we intend to highlight a few ETF trends that are likely to be prevalent in 2017:

Stocks to Be Bullish Overall

The year can be attributed to stocks. The first and foremost reason for it is an end to earnings recession. Earnings growth entered into the positive territory in Q3 of 2016 following five consecutive quarters of decline. For the upcoming Q4 earnings season, the S&P 500 is expected to score 3.3% earnings growth on 4.1% revenue growth.

Earnings for Q1 of 2017 are expected to surge 10.3% for the S&P 500 on 7.5% higher revenues, as per the Earnings Trends issued on January 4, 2017. The earnings growth trend is expected to stay firm even for Q2, Q3 and Q4 of this year with an expectation of 9.8%, 8.2% and 12.5% on revenue growth of 5.7%, 5.5% and 4.8% (read: Ten Predictions for the ETF Industry in 2017).

Along with earnings recovery, stabilization in the oil patch after a prolonged rout and a Trump-induced fiscal boost along with lower taxes should augur well for stocks this year. Still, with markets appearing overvalued by some measure and the President-elect Trump yet to roll out promised measures, cautious investors with a long-term notion can opt for value ETFs over growth. Investors should also note that a stronger U.S. dollar is likely to take some shine off the S&P 500 index as the components are heavily exposed to foreign currencies.

Investors should note that SPDR S&P 500 Value ETF SPYV has a positive weighted alpha of 23.00 while SPDR S&P 500 Growth ETF SPYG has it at positive 13.90. This indicates a higher growth potential in SPYV.

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