Are Mid-Cap ETFs The Right Choice For 2020?

Although 2019 has seen decelerating global economic growth, depleting export levels, relaxing monetary policies and twists and turns in the Sino-US trade war, the investment scenario for 2020 looks attractive. The IMF expects global growth at 3.4% next year compared with its forecast of 3% for 2019. Moreover, ETFs had total assets under management amounting to nearly $4.3 trillion by last November-end (per ETF.com data).

Let’s see what’s making the investment scenario for 2020 attractive.

Sino-US Trade Deal Optimism

President Trump has announced plans to sign the deal with China at the White House on Jan 15, 2020. Within the trade pact, the United States has consented to lower its 15% tariff to 7.5% on about $120 billion worth of Chinese goods. The country has also suspended tariffs on roughly $160 billion of Chinese consumer goods, scheduled to be imposed on Dec 15. Moreover, China recently announced that it will trim tariffs on some imported products, starting 2020.

Beijing announced a new set of tariff exemptions on Dec 19. The waivers will be valid for a year and are expected to be enforced on Dec 26. Notably, the tariffs that have been levied are not likely to be refunded. The latest tax exemption constitutes products like metallocene high-density polyethylene and linear low-density polyethylene. Moreover, several refined oil products comprising white oil and food-grade petroleum wax are included in the list.

Improving US Economy

The upbeat jobs and encouraging manufacturing updates are hinting at a stronger economy. Per Federal Reserve’s recently-released data, the manufacturing sector, accounting for 11% of the U.S. economy, witnessed a 1.1% rise in output during November against 0.7% drop in OctoberIndustrial output also inched up 1.1% in November versus the 0.9% slip in October.

The favorable U.S. homebuilders sentiment data for December also cheered investors. The metric hit an all-time high since June 1999. Moreover, the data on U.S. housing starts, new home sales and building permits has been encouraging.

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