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5 Top-Ranked ETFs to Invest in December

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·6 min read
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  • XLF
  • IVZ
  • ^GSPC

Wall Street witnessed a tough phase in November. The Dow Jones Industrial Average and the S&P 500 indices declined 3.7% and 0.8%, respectively, in the month. The Russell 2000 index lost 4.3% in the month, marking its worst since March 2020.

The omicron variant has stolen some year-end rally thunder. Weakness is being observed on the bourses as there is still a lot of ambiguity about the severity of the new strain and the efficacy of the existing vaccines.

The rising cases due to the new variant have spooked investors. They fear that implementing new lockdown measures to control the spread may hurt the global economic recovery achieved so far,following the reopening of economies. However, some market analysts are anticipating a market rally in December. According to Bank of America, the S&P 500 index has increased 2.3% on average since 1936 and remained positive 79% of the time in December, as mentioned in the CNBC article.

Meanwhile, Federal Reserve Chair Jerome Powell has adversely impacted market sentiments by mentioning that the central bank will be discussing speeding up the tapering process from the $15 billion-a-month schedule decided previously, per a CNBC article. This move might be taken to control the persistently high inflation levels, given that the U.S. economy is strongly recovering from the pandemic-led slump.

Against this backdrop, let’s take a look at some top-ranked ETFs that investors can consider for raking in some good returns:

iShares Biotechnology ETF IBB

There is no denying that the pandemic has opened up investment opportunities in the biotech sector by triggering a race to introduce vaccines and treatment options. Moreover, increasing mergers and acquisition (M&A) deals, growing AI dominance and favorable regulatory tidings continue to work in favor of the biotech market.

Going on, the full FDA approval for COVID-19 vaccines to certain developers has been increasing the confidence for imposing vaccine mandates. Also, the unvaccinated population is now more likely to opt for vaccinations. Now, the nod for booster shots can likely enhance people’s confidence in vaccination. This update is going to accelerate demand for coronavirus vaccines and boost the company’s financials.  Moreover, the space has been gaining increasing attention lately, largely due to the resurgence in COVID-19 infections owing to the omicron variant.

iShares Biotechnology ETF seeks to track the investment results of an index composed of U.S.-listed equities in the biotechnology sector. IBB holds about 265 securities in its basket. iShares Biotechnology ETF has an AUM of $9.77 billion, with an expense ratio of 0.45%. IBB carries a Zacks ETF Rank #1 (Strong Buy) (read: Moderna ETFs Rallying on COVID-19 Vaccine News to Combat Omicron).

Invesco S&P 500 Equal Weight Technology ETF RYT

Technology plays an instrumental role amid the COVID-19 uncertainty in aiding people to maintain safe-distancing norms. Telemedicine and Digital Health are receiving significant importance. Data management and storage have become integral aspects of healthcare in the present era. Thus, with the technological advancements in the healthcare sector and the rising adoption of healthcare IT solutions as well as advantages of cloud usage healthcare, the cloud computing market is on a growth trajectory.

Certain other ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming and soaring video game sales. The work-from-home model has bumped up sales of PCs, laptops and other kinds of computer peripherals.

The Invesco S&P 500 Equal Weight Technology ETF is based on the S&P 500 Equal Weight Information Technology Index. RYT holds about 77 securities in its basket. Invesco S&P 500 Equal Weight Technology ETF has AUM of $2.83 billion, with an expense ratio of 0.40%. RYT sports a Zacks ETF Rank #1 (read: 7 Tech ETFs That Survived the Recent Turmoil).

Vanguard Mid-Cap Value ETF VOE

Considering the mixed sentiments, mid-cap funds are gaining attention as they provide both growth and stability compared to their small-cap and large-cap counterparts. As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs.

The Vanguard MidCap Value ETFis based on the CRSP US Mid Cap Value Index. VOE holds about 208 securities in its basket. Vanguard MidCap Value ETFhas AUM of $15.25 billion, with an expense ratio of 0.07%. VOE sports a Zacks ETF Rank #1.

The Financial Select Sector SPDR Fund XLF

Several factors can be working in favor of the financial sector. The Federal Reserve tapering its monthly bond purchases can be good for the space. The shift toward a tighter monetary policy will push yields higher, thereby helping the financial sector. This is because rising rates will help in boosting profits for banks, insurance companies, discount brokerage firms and asset managers. Notably, steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to receive support from the steepening of the yield curve and a modest rise in loan demand.

The Financial Select Sector SPDR Fund seeks to provide investment results that before fees and expenses generally correspond to the total return performance of the Financial Select Sector Index. XLF has AUM of $41.80 billion and charges 0.12% in expense ratio. XLF carries a Zacks ETF Rank #1.

Invesco NASDAQ Internet ETF PNQI

The pandemic has been a blessing in disguise for the e-commerce industry to date as people continue to practice social distancing and shop online for all essentials, especially food items. Thus, on par with the digitization trend, the upcoming U.S. holiday season is expected to see a significant surge in online sales. Further, expanding digitization and growing dependency on the Internet owing to some new normal trends like work from home, digital payments, digitization of healthcare, rising demand for video gaming and many more such factors are painting a rosy picture for the space.

The Invesco NASDAQ Internet ETF seeks to provide investment results that before fees and expenses generally correspond to the total return performance of the Nasdaq CTA Internet Index. PNQI has AUM of $948.1 million and charges 0.60% in expense ratio. PNQI sports a Zacks ETF Rank #2 (Buy) (read: ETFs to Win/Lose on PayPal's Denial of Pinterest Acquisition).


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iShares Biotechnology ETF (IBB): ETF Research Reports
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
Invesco S&P 500 Equal Weight Technology ETF (RYT): ETF Research Reports
 
Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
 
Vanguard MidCap Value ETF (VOE): ETF Research Reports
 
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Zacks Investment Research