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Best ETF Areas for Placing Your Bets in September

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After an encouraging August, investors seem to be a little sceptical about September. The month has a slightly tainted reputation as it is historically considered to be the worst-performing month for Wall Street. Per the LPL Financial data in a Yahoo Finance article, the S&P 500 has fallen about 1% on average in September since 1950.

Market analysts are expecting a market correction in September. Moreover, there are certain factors that are raising worries like surging delta variant cases and the Federal Reserve meeting where it might announce its plan to taper bond purchases. Thus, LPL Financial chief market strategist Ryan Detrick has said that “Although this bull market has laughed at nearly all the worry signs in 2021, let’s not forget that September is historically the worst month of the year for stocks. Even last year, in the face of a huge rally off the March 2020 lows, we saw a nearly 10% correction in the middle of September,” according to a CNBC article. The same article states that Ryan Detrick expects a short-term market correction in the range of 5-8%.

Considering the current market conditions, let’s take a look at some ETF areas that can be good investment options for September:

Biotech ETFs

The pandemic triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the biotech sector. The space gained on positive COVID-19 vaccine updates. The FDA’s first full U.S. approval to Comirnaty has brought optimism to the space. Moreover, a Reuters report stated that the U.S. government recently announced plans to make COVID-19 vaccine booster shots available starting Sep 20.

Major companies are also making it mandatory for their employees to get vaccinated before returning to company campuses. Important names like Google (GOOGL), Facebook (FB), Netflix (NFLX) and BlackRock can be safely added to the list of companies with a vaccine mandate.

Against the backdrop, let’s look at some popular biotech ETFs that investors can keep an eye on like VanEck Vectors Biotech ETF BBH, iShares Biotechnology ETF IBB, SPDR S&P Biotech ETF XBI and First Trust NYSE Arca Biotechnology Index Fund (FBT) (read: Pfizer Vaccine Approval Triggers a Surge in Biotech ETFs).

Technology ETFs

The technology sector has largely shown strong resilience to the pandemic, rewarding investors with solid returns. Technology continues to play an instrumental role amid the COVID-19 uncertainty in aiding people to maintain safe-distancing norms. Certain other ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming as well as soaring video game sales. The pandemic is also a boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.

Thus, investors could consider ETFs like Vanguard Information Technology ETF VGT, The Technology Select Sector SPDR Fund XLK, iShares U.S. Technology ETF IYW and First Trust NASDAQ-100-Technology Sector Index Fund (QTEC) (read: 5 Tech ETFs Outperforming the Market This Year).

Value ETFs

Value investing is witnessing growing popularity in 2021. Investors seem to be optimistic about the accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led economic slowdown. These factors are creating a conducive environment for value stocks to outperform their growth counterparts this year.

It is worth noting here that value investing seems more lucrative given the improvement in corporate earnings growth and expectation of higher inflation. Moreover, value stocks seek to capitalize on market inefficiencies. They can deliver higher returns with lower volatility compared with the growth and blend counterparts. Additionally, value stocks are less exposed to trending markets and their dividend payouts offer a safety shield during market turbulence.

Against this backdrop, here are some top-ranked value ETFs that investors can consider betting on like iShares S&P 500 Value ETF IVE, Vanguard Mega Cap Value ETF MGV, Schwab U.S. Large-Cap Value ETF (SCHV), Invesco S&P 500 Enhanced Value ETF (SPVU) and Vanguard S&P 500 Value ETF (VOOV) (read: 5 Winning ETF Strategies for the Second Half).

COVID-19 Themed ETFs

The United States is witnessing a considerable rise in the number of COVID-19 cases. Going by Johns Hopkins University data, the United States is witnessing an average of 160,000 new COVID-19 cases a day, per a CNN report. Considering the current situation, Dr. Rochelle Walensky, the director of the US Centers for Disease Control and Prevention (CDC), has urged unvaccinated Americans to avoid travel during the Labor Day holiday weekend, according to a CNN report.

It feels like the rest of 2021 will continue to bear the brunt of the pandemic, before majority of Americans are vaccinated and therefore, a COVID-themed ETF could be a smart pick. Against this backdrop, there have been some launches keeping the pandemic in focus like Direxion Work From Home ETF WFH, Global X Telemedicine & Digital Health ETF EDOC, Global X Education ETF EDUT, Pacer BioThreat Strategy ETF (VIRS) and ETFMG Treatments Testing and Advancements ETF (GERM) (read: Are COVID-Themed ETFs Back in Focus as Delta Variant Fears Rise?).


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iShares Biotechnology ETF (IBB): ETF Research Reports
 
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
VanEck Biotech ETF (BBH): ETF Research Reports
 
iShares U.S. Technology ETF (IYW): ETF Research Reports
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
iShares S&P 500 Value ETF (IVE): ETF Research Reports
 
Vanguard Mega Cap Value ETF (MGV): ETF Research Reports
 
Direxion Work From Home ETF (WFH): ETF Research Reports
 
Global X Education ETF (EDUT): ETF Research Reports
 
Global X Telemedicine & Digital Health ETF (EDOC): ETF Research Reports
 
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