HH A Look At The Christmas Tree Of Top-Ranked ETFs

Christmas celebrations are incomplete without the traditional tree, a symbol of goodwill and love adorned with shining lights and silver bells. Given its significance in this season of joy, we have built a tree with the top-ranked ETFs that have the potential to outperform in 2019.

Let’s build the base first, which is the most valuable part, and of course, the place where all gifts are to be found. There’s nothing’s more fitting than the broad market ETF SPDR S&P 500 (SPY - Free Report), which tracks the major U.S. benchmark — the S&P 500 index — to give a solid foundation to our tree. The index is on the brink of a bear market, losing 18% from its peak early this year, triggered by myriad woes ranging from U.S.-China trade tension to global growth concerns. The partial government shutdown added to the woes.

However, the beaten down price is a solid attractive entry point for investors, given an improving economy and the Fed’s dovish outlook, which will keep rates under control for 2019. The American economy is on track this year to expand at the fastest pace in 13 years, thanks to robust job creation, strong GDP growth, a 50-year low unemployment rate, solid wage gains, as well as rising consumer and business confidence. This would provide a boost to the broad market and SPY, which has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

The volatility is expected to spill into the New Year, given no signs of progress in the U.S-China 90-day trade truce, slowing Chinese economy, deteriorating growth in Japan and Europe, as well as troubles in emerging markets. Further, the flattening yield curve (a phenomenon in which longer-dated debt yields fall faster than their shorter-dated counterparts) has sparked fears of recession.

Amid such uncertainty, utilities sector is expected to see a continued surge. First Trust Utilities AlphaDEX Fund (FXU - Free Report) having a Zacks ETF Rank #2 could be a potential winner. This product follows the StrataQuant Utilities Index, holding 35 securities in its basket with each accounting for no more than 6.2% of the total assets. The fund has accumulated $393.7 million in its asset base and charges 62 bps in annual fees. It is up 6.6% so far this year.

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