Mid-Cap Value ETFs For Q4?

Thanks to an improving economy and reassuring earnings released so far, sentiments in U.S. markets bounced back lately overriding worries over the presidential election, Fed rate hike speculation and volatility in the oil patch. Upbeat inflation data from Europe also supported the rally as this quelled the global growth worries a bit.

But note that though the odds of a severe downturn are pretty low at the current level (or nil to tell you the truth), the fact remains that the U.S. economy is far from being healthy. Most interestingly, the U.S. economy saw a considerable reduction in growth projection from 2.2% to 1.6% by the International Monetary Fund (IMF), thanks to low business investments.

However, some concerns have started to build up over the recent surge and some market analysts are warning of a correction in the coming weeks. This could happen, as valuations appear a bit rich at the current levels.

So, what sort of stocks should one pick to cash in on the moderately buoyant sentiment that can simultaneously insulate the portfolio from a slowing economic growth outlook? In our opinion, it has to be the mid-cap value ETF corner. We’ll tell you why.

Wining Argument Behind Mid-Cap Investing

Investors should note that though retail sales picked up in September, the momentum may melt down in October. This is because consumer confidence suddenly dropped to a one-year low this month given the uncertainty over the presidential election.

Total nonfarm payroll employment rose by 156,000 in September 2016, below an upwardly revised 167,000 in August and market expectations of 175,000. It was the lowest payroll number in four months.

So, a bet on small-cap stocks is not reasonable as this part of the capitalization spectrum better reflects the domestic economic health. On the other hand, the U.S. dollar spurted to a seven-month high. This puts large-cap stocks in jeopardy as mega-cap stocks have considerable exposure in foreign lands and are thus susceptible to adverse currency translation.

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