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6 ETFs to Buy in June

Zacks Equity Research

The month of June can be crucial for many reasons, right from Fed rate hike bets to an unseasonal equity investing pattern. The average return of the S&P 500 was negative 0.1% in June from 1950 to 2015. There were 33 years of a green June while returns were in the red in an equal number of years, as per moneychimp.com.

The repercussions of the “sell in May and go away” adage may have turned investors down from June investing so frequently. This year, the level of uncertainty reached a new height as speculation of a Fed rate hike in a month or two has taken a center stage. Strong U.S economic recovery as evident by strong data points is fanning this bet every day.

Against this backdrop, we highlight a few ETF options that can come across as intriguing bets for the month.

PowerShares S&P 500 ex-Rate Sensitive Low Volatility ETF (XRLV)

If the Fed hike bets get stronger or the central bank actually acts in June, this equity ETF may come to your rescue. XRLV takes care of both interest rate issues and volatility factors. This fund looks at 100 S&P 500 components that exhibit both low volatility and low interest rate risk (read: Low Volatility ETFs Still in Play).

XRLV is heavy on industrials (25.1%), health care (18.8%) and financials (18.5%). No stock accounts for more than 1.32% of the basket. The fund charges 25 bps in fees.

WisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund (HYND)

If bond investors are worrying about interest rate risks, negative duration bonds should be useful. Plus, this fund offers substantial yields which can easily beat out the benchmark yield. In addition, risks over junk bond investing are easing now with the ongoing recovery in oil prices (read: Junk Bond ETFs--Unfortunate Victims of the Oil Crash?).

PowerShares High Yield Equity Dividend Achievers ETF (PEY)
The product offers exposure to companies that have a high dividend yield and raise dividends consistently. Its dividend achievers trait points to quality exposure in a volatile market backdrop while its high-yielding nature is an added advantage. High dividend payments would make up for capital losses, if there is any, to some extent.
 
The fund offers exposure to companies that have high dividend yield and raise dividends consistently. Utilities, energy, financials and consumer staples are the top four sectors of the fund with a double-digit weight each. The fund charges 54 bps in fees (see: Total Market (U.S.) ETFs here).
 
First Trust US IPO Index Fund (FPX)

The U.S. IPO market, which was soft in the initial phase of the year, has been gaining steam from late May and thus a look at an ETF on U.S. IPO seems warranted. This is especially true with June historically being one of the busiest months for IPOs (read: Should You Buy IPO ETFs on Busy Activity?)

The fund has a nice mix of sectors, with the top four being information
technology, health care, consumer discretionary and consumer staples. It charges 60 bps in fees a year.

PowerShares S&P SmallCap Consumer Staples Portfolio ETF (PSCC)
 
As per Equityclock, consumer staples enjoys seasonal strength in the month of June. If this was not enough, this sector is less ruffled by economic fluctuations due to its non-cyclical nature. Moreover, small-cap companies are likely to perform well when an economy perks up. This makes PSCC an intriguing pick (read: Democrats Likely to Win 2016 Election: ETFs to Benefit).  
 
United States Natural Gas (UNG)
 
Natural gas prices has been on a tear lately on expectations of warmer weather ahead which warms up the cooling demand and the usage for natural gases. As per Wall Street Journal, temperature forecast for mid-month, especially in the Southeast and Texas regions, are about five-degrees Fahrenheit higher than normal. This puts UNG – an ETF tracking the natural gas futures – in focus.
 
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PWRSH-SP5 XRATE (XRLV): ETF Research Reports
 
WISDMTR-MLHYBN (HYND): ETF Research Reports
 
PWRSH-HY EQ DV (PEY): ETF Research Reports
 
FT-IPOX 100 (FPX): ETF Research Reports
 
PWRSH-SP SC C S (PSCC): ETF Research Reports
 
US-NATRL GAS FD (UNG): ETF Research Reports
 
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