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6 ETFs for June

Sanghamitra Saha

May was tumultuous for stocks, mainly due to rising trade tensions. But June looks no less scary. The month started by dragging the Nasdaq into correction territory. There are reports that the U.S. government is planning to grill a bunch of big tech companies with antitrust and business practice probes. Shares of Alphabet GOOGL, Amazon AMZN, Facebook FB and Apple AAPL took a hit on the first trading day of June.

U.S. manufacturing data also came in weak. The latest reading pointed to the choppiest pace of expansion in the manufacturing sector since October 2016.  Manufacturing numbers in other countries have come in weary.

Overall, the still-unresolved U.S.-China trade war, global growth issues and Brexit concerns — especially about what might happen after Theresa May’s resignation — are making global investors jittery, boosting demand for safe-haven assets and in turn lowering yields.

In any case, June is not known for good returns. A consensus carried out from 1950 to 2018 shows that June ended up offering positive stock returns in 35 years and negative returns in 34 years, per moneychimp.com, with an average negative return of 0.08%.

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

Gold – SPDR Gold Shares (GLD)

As risk-off trade sentiments took centerstage in May, safe-haven assets like gold should continue to trend higher. A dovish Fed and low levels of interest rates are the other positives for the commodity and related funds like GLD.

Long/Short – AGFiQ U.S. Market Neutral Anti-Beta Fund (BTAL)

In a volatile environment, long-short ETFs like BTAL should do well. The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index is a long/short market neutral index that is dollar-neutral (read: ETF Winners & Losers As China Retaliates).

Real Estate – iShares Residential Real Estate ETF (REZ)

The real estate corner of the broad market has been an area to watch lately given the Fed’s dovish stance that has kept the rates subdued and increased the appeal for rate-sensitive stocks. Flight to safety thus pushed the benchmark U.S. treasury yield to a multi-month low. Since real-estate sectors perform better in a low-rate environment, these stocks have every reason to beat the broader market in June (read: One Year of Trade Spat: 5 ETF Winners).

Brazil – iShares MSCI Brazil Capped ETF (EWZ)

If we go by the median of 17 forecasts from traders, brokers and strategists, Brazil’s benchmark Bovespa stock index is expected to rise 27% in 2019 to end the year at 112,000. Brazilian stocks fared better in May despite the global market turmoil as domestic investors braced for an easing political climate. However, growing uncertainties about the timing and size of a long-awaited pension reform promised by Bolsonaro raises questions about  market conditions for 2020.

Dividend – O'Shares FTSE US Quality Dividend ETF (OUSA)

The underlying FTSE US Qual / Vol / Yield Factor 5% Capped Index measures the performance of publicly listed large-capitalization and mid-capitalization, dividend-paying issuers in the United States. Dividend stocks often beat their non-dividend paying counterparts amid market turmoil. Stocks with high dividend point to quality investing — a pre-requisite to making money in a volatile environment. Even if there is capital loss, dividend payments make up for it to a large extent. The fund yields 2.80% annually (read: 4 High-Dividend ETF Winners Amid May's Trade Tantrum).

Bond – Cambria Sovereign Bond ETF (SOVB)

This ETF is active and does not track a benchmark.  The fund currently invests 10.2% in the United States, followed by 6.8% in Russia, 6.8% in Mexico, 6.8% in South Africa and 6.6% in Brazil. The fund intends to buy and hold attractively priced (high-yielding) bonds.  The fund yields a lofty 4.36% annually (read: Best Performing Fixed-Income ETFs of May).

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
O'Shares FTSE US Quality Dividend ETF (OUSA): ETF Research Reports
AGFiQ US Market Neutral Anti-Beta Fund (BTAL): ETF Research Reports
SPDR Gold Shares (GLD): ETF Research Reports
iShares MSCI Brazil ETF (EWZ): ETF Research Reports
Cambria Sovereign Bond ETF (SOVB): ETF Research Reports
iShares Residential Real Estate ETF (REZ): ETF Research Reports
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