World Bank Lifts 2023 Global Growth Forecast: 5 ETF Picks
The World Bank raised the global growth forecast for this year as the United States, China and other major economies have shown greater-than-expected resiliency. This was primarily due to the recovery of the China economy and improving growth prospects in several major economies.
The global economy is set to climb 2.1%, up from 1.7% projected in early January but well below the 2022 growth rate of 3.1%. The rise in projections came on the back of strength in the labor market, better-than-expected consumption in the United States and solid recovery in China following COVID-19 lockdowns. Additionally, the Fed might be nearing the end of its interest rate hiking cycle given easing inflation, something that will bolster the world’s largest economy.
Global economic growth accelerated to its fastest pace for one and a half years in May as demand for services continued to revive. The Global PMI — compiled by S&P Global across more than 40 economies — grew for a sixth consecutive month from 54.2 in April to 54.4, its highest since November 2021.
Growth in the United States is projected to grow 1.1%, more than double the 0.5% forecast in January. China is expected to grow 5.6%, compared with 4.3% forecast in January. The eurozone economy is expected to grow 0.4% this year versus the flat outlook projected in January (read: ETFs to Tap the Surge in Japan Stocks).
However, 2023 is still likely to be one of the slowest growth years for advanced economies in the last five decades as two-thirds of developing economies will see lower growth than in 2022.
Investors seeking to participate in the economic recovery should invest in ETFs of the countries that have seen rising growth forecast. Below, we have highlighted some of them:
Vanguard Total World Stock ETF (VT)
Vanguard Total World Stock ETF tracks the FTSE Global All Cap Index, which covers well-established and still-developing markets. It holds a broad basket of 9543 stocks, with North American firms accounting for 62.1% of the assets, followed by Europe (17%), Pacific (10.8%) and Emerging Markets (9.9%).
Vanguard Total World Stock ETF has AUM of $27.8 billion and trades in an average daily volume of 1.3 million shares. It charges 7 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a Low risk outlook.
iShares MSCI ACWI ETF (ACWI)
iShares MSCI ACWI ETF offers exposure to a broad range of developed and emerging market companies by tracking the MSCI ACWI Index. It holds a broad basket of 2331 stocks in its basket with key holdings in information technology, financials, healthcare and consumer discretionary. From a country look, the United States takes the largest share at 61% share while Japan, the United Kingdom and China round off the next three spots.
With AUM of $17.2 billion, iShares MSCI ACWI ETF trades in a volume of 2.4 million shares a day and charges 32 bps in annual fees. ACWI has a Zacks ETF Rank #3 with a Low risk outlook.
SPDR Global Dow ETF (DGT)
SPDR Global Dow ETF offers exposure to 153 companies from both developed and emerging countries selected not just based on size and reputation but also on their promise of future growth. It tracks the Global Dow Index, charging 50 bps in annual fees. Financials, industrials, consumer discretionary and information technology are the top sectors with a double-digit allocation each (read: 5 Stocks in Dow ETF Leading Index to Best Day of 2023).
SPDR Global Dow ETF has amassed $142.1 million in its asset base and trades in an average daily volume of 11,000 shares.
SPDR S&P 500 ETF Trust (SPY)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.5% of assets. SPDR S&P 500 ETF Trust is heavily skewed toward the information technology sector, which holds a 27.8% share. Healthcare, financials and consumer discretionary round off the next three spots with a double-digit allocation each (read: Analysts Raise S&P 500 Target Price: ETFs to Buy).
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 69 million shares. It has AUM of $404.9 billion and a Zacks ETF Rank #3 with a Medium risk outlook.
iShares MSCI China ETF (MCHI)
iShares MSCI China ETF targets the Chinese stock market and follows the MSCI China Index. Holding 646 securities in its basket, the fund is highly concentrated on the top firm. From a sector look, about 28.4% of the portfolio is allotted to consumer discretionary, while communication (19.2%) and financials (16.5%) round off the next two spots (read: 5 China ETFs to Tap as Economy Recovers).
iShares MSCI China ETF has amassed $7.8 billion in its asset base while charging 58 bps in annual fees. Volume is also solid as it exchanges nearly 4 million shares daily on average. The ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares MSCI China ETF (MCHI): ETF Research Reports
iShares MSCI ACWI ETF (ACWI): ETF Research Reports
Vanguard Total World Stock ETF (VT): ETF Research Reports
SPDR Global Dow ETF (DGT): ETF Research Reports
