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6 ETFs to Buy in June

Sanghamitra Saha

The month of June can be vital to investors for many reasons from strong Fed rate hike bets to an unseasonal equity investing pattern. A consensus carried out from 1950 to 2016 shows that June ended up offering positive stock returns in 34 years and negative returns in 33 years, per moneychimp.com, with an average return of negative 0.09%.

The repercussions of the “sell in May and go away” adage may have steered investors away from June investing so frequently. Though the broader market has been pretty upbeat lately, uncertainty may flare up this month thanks to 90% probability of a Fed hike in mid-June, as per the CME Fedwatch Tool, downbeat U.S. job data and wavering Trump trade.

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.

XRLV is heavy on industrials (23.6%), information technology (18.7%) and financials (18.0%). No stock accounts for more than 1.37% of the basket. The fund charges 25 bps in fees.

SPDR S&P Aerospace & Defense ETF XAR

Trump recently proposed a 10% or $54-billion increase in defense spending and signed a big-ticket defense deal with Saudi in May. This should benefit defense ETFs like XAR (read: ETFs to Top/Flop as Trump Lays Foundation for Future America).

iShares MSCI Eurozone EZU

The Eurozone saw a strong start to the year thanks to economic improvement and upbeat corporate earnings. With European economic fundamentals improving, this could be an opportunity to invest in this Euro zone ETF (read: What Makes These Europe ETFs Still Roaring).

Investors should note that the National Association for Business Economists’ recent survey indicates gross domestic product growth of 2.2% this year and 2.4% in 2018. Those forecasts are lower by about 0.1 percentage points from a survey in March.

Schwab U.S. Large-Cap Growth ETF SCHG

Investors should note that large-cap stocks have wide foreign exposure. Foreign economies are looking up lately, making the case for large-cap investing even stronger. The World Bank too expects global economic growth to accelerate to 2.7% in 2017 and 2.9% in 2018 from 2016′s 2.4% expansion. Corporates have been strengthening not only in the U.S. but also in Europe and other so-long besieged regions, as per Reuters. As a result, large-cap growth ETFs like SCHG are likely to enjoy some special benefit (read: 7 Large-Cap Growth ETFs That Are Sizzling).

SPDR Morgan Stanley Technology ETF MTK

The tech sectorhas been hot lately. As per the source, most of the economists hinted that President Donald Trump will likely push through an infrastructure plan and slash corporate and individual taxes before the end of 2018. The tech sector will likely be a huge beneficiary of tax cuts. So, investors can prepare to pour money into this fund (read: 5 ETFs & Stocks to Ride the Tech Mania).

PowerShares S&P SmallCap Consumer Staples Portfolio ETF PSCC
As per Equityclock, consumer staples also enjoys seasonal strength in the month of June. If this is not enough, this sector is less ruffled by economic fluctuations due to its non-cyclical nature. As a result, this small-cap consumer staples ETF comes as a good bet in a downbeat month like June. Moreover, small-cap companies are likely to perform well in an improving economy. This makes PSCC an intriguing pick.  

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ISHARS-EMU IDX (EZU): ETF Research Reports
SCHWAB-US LCG (SCHG): ETF Research Reports
PWRSH-SP5 XRATE (XRLV): ETF Research Reports
SPDR-SP AER&DEF (XAR): ETF Research Reports
PWRSH-SP SC C S (PSCC): ETF Research Reports
SPDR-MS TECH (MTK): ETF Research Reports
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