Get Your Portfolio Christmas-Ready With These ETFs

 

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Wall Street seems to be ready with Christmas presents for investors in the form of solid returns. Optimism among market participants is high on positive news surrounding the coronavirus vaccine and another round of fiscal stimulus. Consequently, the Dow Jones Industrial Average delivered its highest-ever closing on Dec. 17. Other two broad indices, the S&P 500 and Nasdaq, also hit intraday and closing records.

It seems like Congress is close to agreeing upon a $900-billion coronavirus relief deal. However, the government aid is expected to exclude liability protections for businesses or support to state and local government, according to a CNBC article. In this regard, Senate Majority Leader Mitch McConnell, has said that a “bipartisan, bicameral agreement appears to be close at hand,” per a CNBC article.

It is worth noting here that investors are getting increasingly desperate for another round of fiscal stimulus as the coronavirus outbreak continues to aggravate and pandemic pressure on the economy is rising. In this regard, Dan Deming, managing director at KKM Financial, has said that “stimulus is still the main driver in the market right now until they get something done, and it does appear there is some motivation on that front to get something done,” per a CNBC article.

Meanwhile, the FDA’s Vaccines and Related Biological Products Advisory Committee has overwhelmingly supported Moderna’s (MRNA) coronavirus vaccine and voted 20-0 with one abstention, per a CNBC article.

Analysts seem to be upbeat about the final month of the pandemic-hit 2020. According to Tom Lee of Fundstrat Global Advisors, “December looks like it will be a very strong finish for 2020,” as mentioned in a CNBC article. Lee has also presented some data that substantiate the fact that when the S&P 500 gains more than 10% through November for the year during bull markets, it always increases those gains in December, per a CNBC article. He added that the data “confirms our view that strong markets finish strong.”

Ally Invest’s Lindsey Bell also believes that the current investing environment is favorable for December gains and said that “we’re positive that it will be a good end to 2020,” as told to CNBC’s “Trading Nation” on Wednesday. Bell believes that another round of fiscal stimulus might act as a near-term catalyst for U.S. equities along with support from resilient consumer spending, per the article mentioned above.

Here we highlight some ETFs that can help investors make the most of the favorable investing opportunities amid the coronavirus crisis:

iShares MSCI USA Momentum Factor ETF MTUM

While the broader stock market is expected to gain on optimism surrounding the rebounding U.S. economy and positive developments in coronavirus vaccine research, momentum investing will likely take centerstage as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months.

The fund provides exposure to large- and mid-cap U.S. stocks exhibiting relatively higher price momentum and tracks the MSCI USA Momentum SR Variant Index. The fund has an expense ratio of 15 basis points (bps) (read: After a Historic November, What Awaits ETFs in December?).

iShares Nasdaq Biotechnology ETF IBB

The biotechnology sector has kept its promise of returns so far. From vaccine-related positive news on progress in the development of cell therapies for addressing coronavirus, all kept the sector surging. Notably, the race to introduce vaccine and treatment of coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. Encouraging progress is being witnessed in the coronavirus vaccine development that is boosting investors’ hopes. Pfizer Inc. (PFE) and BioNTech SE (BNTX) have again posted encouraging updates regarding their coronavirus vaccine candidate, BNT162b2. The duo’s two-shot vaccine has been authorized by U.K. medicines regulator, the Medicines and Healthcare products Regulatory Agency (MHRA) and FDA and it is being rolled out.

Furthermore, Moderna has applied to the FDA for emergency-use authorization for its coronavirus vaccine. Going on, Sanofi (SNY), GlaxoSmithKline (GSK) and Johnson & Johnson (JNJ) are also progressing in the development of coronavirus vaccines and will likely be ready to roll out the same in 2021.

This fund seeks to provide exposure to U.S. biotechnology and pharmaceutical stocks and tracks the Nasdaq Biotechnology Index. The fund has an expense ratio of 0.46% (read: ETF Sectors to Bet on Positive Vaccine News).

The Energy Select Sector SPDR Fund XLE

The coronavirus pandemic has dealt a heavy blow to the energy sector. Dented global energy demand and oversupply have also been hurting the sector for long. The outbreak has forced operators to cut costs significantly by suspending some of their major activities as well as trimming workforce. However, the introduction of coronavirus vaccine and another round of fiscal stimulus are expected to provide great support to U.S. equities and boost oil demand and support the sector.

The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index. It has an expense ratio of 0.13% (read: 10 Most-Heavily Traded ETFs of Q4).

Amplify Online Retail ETF IBUY

The pandemic has provided a push to the e-commerce industry as people continue to prefer staying indoors and shopping online for all essentials, especially food items. Keeping up with the digitization trend, the upcoming U.S. holiday season is expected to see a significant surge in online sales. Per the latest data from National Retail Federation (“NRF”), an estimated 186.4 million Americans shopped in-store and online during the Thanksgiving weekend (from Thanksgiving through Cyber Monday). The figure was higher than 165.8 million in 2018 but was down from last year’s 189.6 million. Online-only shopper count rose 44% during the weekend to 95.7 million. Black Friday and Saturday also witnessed impressive growth in online activity. The number of online Black Friday shoppers passed the 100-million mark for the first time, up 8% from last year. The number of online Saturday shoppers also rose 17% year over year.

The fund provides a cost-efficient way for investors to own a basket of companies, with significant revenues from online or virtual retail sales. The fund has an expense ratio of 65 bps (read: 3 Sector ETFs & Stocks to Shine Despite Soft November Retail Sales).

Vanguard Information Technology ETF VGT

Major technology players have shown resilience to the pandemic-led economic slowdown. These also highlight the key role that technology plays with respect to helping people maintain social-distancing norms. The aggravating coronavirus outbreak resulted in Americans spending more time indoors and opting for in-house entertainment modes. Moreover, surging work-from-home and online shopping trends, increasing digital payments, growing video streaming and soaring video game sales have been observed in the pandemic times. Apart from this, an increasing number of people are now resorting to streaming platforms like Netflix, Amazon Prime or Disney+ or turning to social media platforms like Facebook and Twitter for in-house entertainment.

Keeping up with these new trends, a few major technology stocks have been gaining traction from the buoyancy in demand for their products and services. The fund seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index. It charges investors 10 bps in annual fees (read: Bet on These Top-Ranked Technology ETFs Amid Soaring Covid-19 Cases).

VanEck Vectors Video Gaming and eSports ETF ESPO

The video game industry is booming, with people increasingly playing video games for some in-house entertainment, while maintaining social distancing amid the pandemic. Moreover, the boom in the video gaming space might remain in the post-pandemic era as well. Moreover, considering the aggravating coronavirus outbreak, health experts have strongly advised people to refrain from traveling for the holidays. Thus, with kids and adults having to spend the holidays at home, we are expecting to see a surge in demand for video games as gifting options and also for in-house entertainment.

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It charges 55 bps in expense ratio (read: 6 ETFs to Consider as Thanksgiving Week Begins).

Disclaimer: Neither Zacks Investment Research, Inc. nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web ...

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