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ETF Strategies to Gain as Wall Street Opens at a Record High

Sweta Jaiswal, FRM

After a record run last week, the S&P 500 and Nasdaq Composite rose 0.37% to 3,078.27 and 0.56% to 8,433.20, respectively, on Nov 4. Joining the rally, the Dow Jones Industrial Average rose 0.42% to a record 27,462.11 on the same day. (read: S&P 500 at Record High: 6 ETF Winners of Last Week). 

Let’s discover the factors that are supporting the Wall Street momentum.

What’s Behind the Upside?

The global economy has been suffering owing to the 15-month-long trade spat between the world’s two largest economies. However, certain positive developments have raised optimism among investors on a solution to the trade tussle. Notably, U.S. Commerce Secretary, Wilbur Ross recently announced that the American firms will be soon given licenses to sell to Chinese telecom giant Huawei. Per articles by the Financial Times and the Wall Street Journal, the United States and China are planning to roll back some tariffs if a trade deal is signed.

Release of impressive US economic data is also aiding the Wall Street. The robust jobs data report for October has instilled optimism among investors. In October, U.S. employers added 128,000 new jobs, after an upwardly revised 180,000 gains in September. The latest number beat market expectations of 89,000. After revisions, job gains averaged 38,000 per month over the last three months (read: Sector ETFs to Win After Robust October Jobs Data).

Also, the third-quarter earnings season has been quite decent, per the Earnings Trends report issued on Nov 1. Per the report, out of the 357 S&P 500 members that have reported results, 74.5% has surpassed earnings estimates and 59.7% beat revenue estimates.

ETF Strategies to Follow

Here we discus certain ETF strategies to help our investors make the most of the current bull market.

Momentum ETFs

While the broader stock market is expected to gain traction from positive developments in trade talks, momentum investing will likely take centre stage as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Investors can consider iShares Edge MSCI USA Momentum Factor ETF MTUM, Invesco DWA Momentum ETF PDP, Invesco S&P MidCap Momentum ETF XMMO, VictoryShares USAA MSCI USA Value Momentum ETF ULVM and SPDR Russell 1000 Momentum Focus ETF ONEO (read: Is This the Right Time to Buy Momentum ETFs?).

Growth ETFs

Growth stocks are likely to witness revenue and earnings growth at a faster rate than the industry average. As such, growth funds tend to outperform during an uptrend. While there are plenty of options in the growth ETF world, we have highlighted five funds that offer broad-based exposure to the U.S. stock market like Vanguard Growth ETF VUG, Schwab U.S. Large-Cap Growth ETF SCHG, iShares Core S&P U.S. Growth ETF IUSG, SPDR S&P 500 Growth ETF SPYG and Vanguard Mega Cap Growth ETF MGK.

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iShares Edge MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports
 
Schwab U.S. Large-Cap Growth ETF (SCHG): ETF Research Reports
 
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
 
Invesco DWA Momentum ETF (PDP): ETF Research Reports
 
Vanguard Growth ETF (VUG): ETF Research Reports
 
iShares Core S&P U.S. Growth ETF (IUSG): ETF Research Reports
 
SPDR Portfolio S&P 500 Growth ETF (SPYG): ETF Research Reports
 
SPDR Russell 1000 Momentum Focus ETF (ONEO): ETF Research Reports
 
Invesco S&P MidCap Momentum ETF (XMMO): ETF Research Reports
 
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM): ETF Research Reports
 
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