For Immediate Release
Chicago, IL – February 05, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ), FlexShares STOXX Global Broad Infrastructure ETF (NFRA), First Trust Morningstar Dividend Leaders ETF (FDL), SPDR S&P Intl Consumer Staples Sector ETF (IPS) and iShares MSCI All Country World Minimum Volatility ETF (ACWV).
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Here are highlights from Thursday’s Analyst Blog:
ETFs to Buy for February
After enduring intense volatility in January and seeing the worst start to a year, we have entered February with hopes of a ricocheting market. But the dour mood was maintained as Wall Street skid sharply on February 2 as investors took down energy and financial stocks, especially following a sub-$30 U.S. crude oil price.
In any case, February has never been known for sound equity returns. The average return of the S&P 500 was negative 0.05% in February, from 1950 to 2015. There were 38 years of a green February while returns were in red in 28 years. With renewed concerns about oil price declines, its deep-rooted negative impact on the global economy and spiraling global growth concerns, chances are high that this February will also end in red.
In such a scenario, investors can take a look at the below-mentioned ETFs; some of which offer safety and some others that hold strong fundamentals even in this tough time.
25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ)
Who can forget long-term U.S. Treasuries, especially after the 10-year bond yields declined to below 2%? With the present soft U.S. economic condition not letting the Fed to be overtly hawkish over policy tightening, good times are ahead for the long-term U.S. treasury bonds. Also, a muted inflationary backdrop and a bid to safety amid the global market rout have brightened the appeal for this investing class.
So, risk-averse investors can definitely turn toward the long-term U.S. treasury ETF ZROZ. This ETF follows the BofA Merrill Lynch Long US Treasury Principal STRIPS Index, which focuses on Treasury principal STRIPS that have 25 years or more remaining to final maturity (read: 3 Safe-Haven ETFs to Watch on Market Correction ).
Apart from ZROZ, investors also park their money in Vanguard Extended Duration Treasury ETF – a fund matching the performance of the Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index – and in iShares 20+ Year Treasury Bond ETF which tracks the Barclays Capital U.S. 20+ Year Treasury Bond Index. Each of these products has a Zacks ETF Rank #2 (Buy).
FlexShares STOXX Global Broad Infrastructure ETF (NFRA)
This ETF could be appropriate for investors seeking to play the booming infrastructural activities worldwide. Investors should note that infrastructure is an interest rate sensitive sector, usually with strong yields.
Thus, a still-low interest rate environment in the U.S., the introduction of negative interest rate on excess reserves and rock-bottom interest rates in the Euro zone make this infrastructure ETF look attractive at the current level.
The fund has exposure to each of these regions with the U.S. holding about 41.5% exposure followed by 11.6% share grabbed by Japan, and 8.9% and 4.7% share taken by the U.K. and Canada, respectively. NFRA yields 2.5% annually and has lost just 0.5% so far this year (as of February 3, 2016), pretty decent compared with gigantic losses incurred by other securities.
First Trust Morningstar Dividend Leaders ETF (FDL)
Now, with the U.S. economy losing steam from the end of 2015, the spotlight is once again on large-cap stocks and the related ETFs. This is because this segment is considerably exposed to the international arena unlike the smaller capitalization which mainly generates revenues from the domestic market. Meanwhile, U.S. dollar plunged the most in seven years, wiping out currency translation risks.
Added to this, value quotient is necessary right now given the rise of volatility around the world. If this was not enough, global policy easing has sharpened investors’ drive for higher income. All these requirements can be met by investing in FDL, which yielded 3.61% as of February 3, 2016 (read: Dogs Beating Dow in Wild Ride: 6 ETFs in Play ).
In total, the fund holds about 100 stocks that have shown dividend consistency and sustainability with five Dogs of the Dow accounting for an about 30% of assets. The fund is up about 1.5% so far this year (as of February 3, 2016).
SPDR S&P Intl Consumer Staples Sector ETF (IPS)
The fund represents the non-U.S. consumer staples sub-industry of developed countries included in the S&P Broad Market Index. Since the consumer staples sector has a non-cyclical nature and yields well in a rock-bottom interest rate environment, the product could be a hit in the current month.
The fund has double-digit exposure in the U.K., Japan and Switzerland. It yields 1.94% and was up about 2.5% in the last one month, the best among all the consumer staples ETFs in the Zacks category (read: 5 Market-Beating Broad International ETFs of 2015).
iShares MSCI All Country World Minimum Volatility ETF (ACWV)
What could be a more reasonable bet than a minimum volatility ETF in this turbulent time? Investors can have a look at it either on a global basis by investing in ACWV, or target the U.S. market and invest in products like US Large Cap High Dividend 100 Volatility Weighted Index ETF (read: Can Low Volatility ETFs Save Your Portfolio from Market Rout?).
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PIMCO-25Y ZERO (ZROZ): ETF Research Reports
FLEXS-ST GBIIF (NFRA): ETF Research Reports
FT-MRN DVD LE I (FDL): ETF Research Reports
SPDR-SP I CON S (IPS): ETF Research Reports
ISHARS-MS ACW (ACWV): ETF Research Reports
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