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ETFs to Buy on Fund Managers' Big Bet on U.S. Stocks

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Wall Street is enjoying a smooth ride this year with the major bourses near record highs. Solid corporate earnings and an improving economy have been driving the markets higher though inflation fear is weighing on investors’ sentiment.

According to a Bank of America Corp. survey conducted Nov 5 to 11, global fund managers are ending the year with the biggest overweight in U.S. stocks since August 2013 as risk appetite outweighs inflation and tapering woes. Fund managers increased their allocation to U.S. equities by 13 percentage points from the previous month to a 29% overweight, suggesting that they have become more optimistic on global growth and earnings.

The bullish view is expected to push the ETFs further higher. Given this, First Trust ISE-Revere Natural Gas Index Fund FCG, VanEck Vectors Rare Earth/Strategic Metals ETF REMX, Amplify Transformational Data Sharing ETF BLOK, SPDR S&P Retail ETF XRT and Invesco S&P SmallCap Value with Momentum ETF XSVM are showing solid strength this year and will likely continue their momentum going forward.

The Q3 earnings from 460 S&P 500 members that have reported so far are up 43.1% from the same period last year on 18.6% lower revenues, with 79.3% beating EPS estimates and 74.3% beating revenue estimates. Combining the actual results that have come up with estimates for the still-to-come companies, total Q3 earnings for the S&P 500 index are expected to be up 39.7% from the same period last year on 16.9% higher revenues. Aggregate Q3 earnings for the S&P 500 Index are on track to reach a new all-time quarterly record, surpassing the record set in the preceding quarter.

ETFs in Focus

First Trust ISE-Revere Natural Gas Index Fund

First Trust ISE-Revere Natural Gas Index Fund offers exposure to U.S. companies involved in the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 40 stocks in its basket with each accounting for less than 4.61% of assets.

First Trust ISE-Revere Natural Gas Index Fund has amassed $526.3 million in its asset base while charging 60 bps in annual fees. Volume is good for FCG with 1.8 million shares exchanged per day on average. FCG has a Zacks ETF Rank #2 (Buy) (read: 5 Winning ETF Ideas for the Fourth Quarter).

VanEck Vectors Rare Earth/Strategic Metals ETF

VanEck Vectors Rare Earth/Strategic Metals ETF offers exposure to companies engaged in producing, refining and recycling of rare earth and strategic metals and minerals. REMX follows the MVIS Global Rare Earth/Strategic Metals Index, holding 20 stocks in its basket. From a country look, Chinese firms dominate the portfolio with a 33% share, closely followed by Australia (30.4%) and the United States (14.3%).

VanEck Vectors Rare Earth/Strategic Metals ETF has AUM of $1.1 billion and an average daily volume of 205,000 shares. The product charges 59 bps in annual fees.

Amplify Transformational Data Sharing ETF

Amplify Transformational Data Sharing ETF is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It holds a basket of 49 stocks with none accounting for more than 5.5% of the portfolio. American firms dominate about 74.2% of the portfolio, followed by Asia Pacific (17.7%). From an industrial look, software takes the largest share at 36.8%, while IT services and capital markets round off the next two spots with a double-digit exposure each.

Amplify Transformational Data Sharing ETF has AUM of $1.6 billion in its asset base and trades in average daily volume of 507,000 shares. BLOK has an expense ratio of 0.71%.

SPDR S&P Retail ETF

SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid-and small-cap stocks. It holds well-diversified 107 stocks in its basket with none making up for more than 1.6% share. Additionally, SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in Internet & direct marketing retail, apparel retail, automotive retail, and specialty stores (read: 5 ETFs to Buy This Holiday Season for Gift of Good Returns).

SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $1.2 billion and an average trading volume of 2.7 million shares. It charges 35 bps in annual fees and has shed 1.4% in a week. SPDR S&P Retail ETF has a Zacks ETF Rank #1 with a Medium risk outlook.

Invesco S&P SmallCap Value with Momentum ETF

Invesco S&P SmallCap Value with Momentum ETF offers exposure to the companies having the highest "value scores" and "momentum scores" by tracking the S&P 600 High Momentum Value Index. XSVM holds a basket of 118 stocks with each making up for less than 3% share. Invesco S&P SmallCap Value with Momentum ETF has double digit allocations each in financials, consumer discretionary and industrials (read: Are Small Caps the Best Bets for 2022? ETFs in Focus).

Invesco S&P SmallCap Value with Momentum ETF has AUM of $512.9 million and an average daily volume of 105,000 shares. XSVM charges 39 bps in annual fees.


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SPDR S&P Retail ETF (XRT): ETF Research Reports
 
First Trust Natural Gas ETF (FCG): ETF Research Reports
 
VanEck Rare EarthStrategic Me (REMX): ETF Research Reports
 
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
 
Invesco S&P SmallCap Value with Momentum ETF (XSVM): ETF Research Reports
 
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