6 Red-Hot ETFs Of February

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February was marked by volatility triggered by a sharp rise in long-term Treasury yields that has sparked fears of overvaluation in the high-growth and high-beta sectors. However, the appeal for cyclical stocks, which were the most beaten down during the pandemic and relatively cheaper, kept the bulls intact.

With continued progress in more vaccines, rapid vaccination rollout, and the prospect of further U.S. stimulus, the economy is on the mend with swift recovery expectation. The combination of factors will result in increased industrial activity and pickup in consumer demand, thereby leading to higher demand for all types of products and services in the economy. In particular, Americans will spend on big-ticket items such as vacations and weddings, companies will go on hiring sprees, and the transition to new technologies such as electric vehicles will accelerate. Improvement in corporate earnings growth also bodes well for the stocks.

As such, ETFs tracking the stocks notched their best month of inflows on record, according to Bloomberg, as traders added almost $86 billion to those funds in February. Per etfdb, U.S. equity ETFs pulled in $88.7 billion in February – marking the second-largest monthly haul in history and behind record of $91.2 billion seen last November.

Below, we have highlighted some equity funds that gained immense popularity last month and will likely do so, given the latest encouraging development in vaccines from the likes of Johnson & Johnson (JNJ - Free Report) as well as upbeat manufacturing and consumer spending data:

Vanguard S&P 500 ETF (VOO - Free Report)

VOO was the most popular ETF plays last month, pulling in about $11.3 billion in capital. It tracks the S&P 500 Index and holds 509 stocks in its basket with each accounting for not more than 6.7% share. The fund is widely spread across sectors with information technology, healthcare, consumer discretionary, and communication services being the top four, with a double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in average daily volume of 3.1 million shares. It has AUM of $194.9 million and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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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 ...

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