Top-Ranked ETFs That Beat The Market In October

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Wall Street staged a solid comeback last month, with all three major indices logging positive returns. The Dow Jones Industrial Average wrapped up its best month since 1976, surging about 14% in October, while the S&P 500 and the tech-heavy Nasdaq Composite Index gained about 8% and 3.9%, respectively.

While there have been winners in many corners of the space, we highlight five ETFs from different industries that outperformed last month. These have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). The funds are, namely, iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report), iShares North American Tech-Multimedia Networking ETF (IGN - Free Report), iShares U.S. Insurance ETF (IAK - Free Report), Vanguard S&P Small-Cap 600 Value ETF (VIOV - Free Report) and Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report). These are likely to continue outperforming should the trends prevail.

The monthly gains were driven by hopes of a less hawkish Fed as well as better-than-expected earnings outside the tech sector. According to CME Group, traders have become more confident the Fed will reduce its rate hike plans from three-quarters to half a percentage point at its December meeting. Many on Wall Street are expecting that the Fed could pause its hikes or reduce its rate hike size in the near future.

Additionally, investors are betting that traditional stocks like banks will lead the next bull market. Notably, energy and industrials were the biggest winners in October.

The U.S. economy posted its first period of growth in the third quarter. GDP grew 2.6% annually versus the estimate of 2.3%. A narrowing trade deficit as well as increases in consumer spending and government outlays boosted the growth.

We have profiled the above-mentioned ETFs in detail below:

iShares U.S. Oil Equipment & Services ETF (IEZ) – Up 42.4%

iShares U.S. Oil Equipment & Services ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction. It follows the Dow Jones U.S. Select Oil Equipment & Services Index, holding 26 stocks in its basket .

iShares U.S. Oil Equipment & Services ETF has amassed $223.2 million in its asset base while charging 39 bps in fees per year from investors. It trades in an average daily volume of 404,000 shares and has a Zacks ETF Rank #2 with a High risk outlook.

iShares North American Tech-Multimedia Networking ETF (IGN) – Up 15.8%

iShares North American Tech-Multimedia Networking ETF provides exposure to telecom equipment, data networking and wireless equipment companies by tracking the S&P North American Technology-Multimedia Networking Index. It holds 21 securities in its basket.

iShares North American Tech-Multimedia Networking ETF has accumulated $109.8 million in its asset base and sees a light volume of around 11,000 shares a day. IGN charges 40 bps in annual fees and carries a Zacks ETF Rank #1.

iShares U.S. Insurance ETF (IAK) – Up 14.9%

With AUM of $384.1 million, iShares U.S. Insurance ETF offers exposure to U.S. companies that provide life, property and casualty, and full-line insurance. It tracks the Dow Jones U.S. Select Insurance Index and holds 56 securities in its basket.

Property & casualty insurance accounts for the largest share at 55.2%, while life & health insurance and multiline insurance round off the next two spots with double-digit exposure each. iShares U.S. Insurance ETF charges 39 basis points in annual fees and trades in an average daily volume of 48,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.

Vanguard S&P Small-Cap 600 Value ETF (VIOV) – Up 14.9%

Vanguard S&P Small-Cap 600 Value ETF follows the S&P Small-Cap 600 Value Index, which is composed of the value companies in the S&P 600. It holds 467 securities in its basket, with key holdings in financials, industrials and consumer discretionary.

Vanguard S&P Small-Cap 600 Value ETF has amassed $1.2 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 50,000 shares and has a Zacks ETF Rank #1 with a Medium risk outlook.

Invesco S&P 500 Enhanced Value ETF (SPVU) – Up 14.6%

Invesco S&P 500 Enhanced Value ETF follows the S&P 500 Enhanced Value Index, which measures the performance of stocks in the S&P 500 Index that have the highest "value score." The product holds 99 stocks in its basket with key holdings in financials, healthcare, and consumer discretionary.

Invesco S&P 500 Enhanced Value ETF has accumulated $125.2 million in AUM while trading in a light average daily volume of 34,000 shares. The product charges 13 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.


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