For Immediate Release
Chicago, IL – May 31, 2017 – Today, Zacks Investment Ideas feature highlights Features: Vanguard Mega Cap Growth ETF (NYSEARCA:MGK – Free Report ), PowerShares Russell Top 200 Pure Growth Portfolio (NYSEARCA:PXLG – Free Report ), iShares Global 100 ETF (NYSEARCA: IOO – Free Report ) and SPDR Euro STOXX 50 ETF (NYSEARCA: FEZ – Free Report ).
Invest in Superstar Stocks with These ETFs
Large multinational companies, particularly tech giants, have been on a tear this year, as the global economic picture continues to brighten. Due to their high global revenue exposure, these companies are poised to prosper with the improving global economy.
After presidential election, shares of domestically focused American companies had surged in anticipation of fast economic growth in the US and a strong dollar while multinational stocks lagged. The situation of reversed this year.
Per NYT , 113 companies in the S&P 500 index that derive at least 50% of their sales outside the US, gained an average 13.56% from election through May 19, handily beating the 8.15% gain for 161 S&P 500 companies that make at least 90% of their sales within the US. (Read: 4 Outperforming ETFs for Japan Exposure ?)
This gap would be even larger if they had used market cap weighted and not equal weighted performance numbers in the calculations, because of outsized impact of tech titans like Apple, Google-Alphabet and Microsoft.
Per FactSet, S&P 500 companies that generate more than 50% of sales inside the US, reported blended sales growth rate of 7.1% for Q1, while for companies that generate less than 50% of sales inside the US, the blended sales growth rate was 9.4%
As the global economy becomes more integrated and deregulated, one might expect more competition but the truth is that the leading companies in the world are becoming bigger and better. Per FT , these companies are “very good at what they do. Competition isn’t a threat to them. It’s an opportunity.” (Read: India ETFs—More Run Ahead ?)
According to a working paper “The Fall of the Labor Share and the Rise of Superstar Firms”, industries have become more concentrated on average. Second, the trend is much stronger when measuring concentration in sales rather than employment.This suggests that largest companies are gaining market shares with relatively few workers. This results in improving profit margins for blue-chip companies, quarter after quarter.
Below are some ETFs that investors could consider to benefit from this trend.
Vanguard Mega Cap Growth ETF (NYSEARCA:MGK – Free Report )
MGK provides a convenient way to get diversified exposure to the largest growth stocks in the US. It has $2.9 billion in AUM, currently invested in 142 stocks. Apple, Alphabet, Amazon, Facebook and Home Depot are the top five holdings.
The product charges just 7 basis points in expenses. (Read: Best ETF Strategies for Trump Uncertainty )
The ETF is up about 15% this year.
PowerShares Russell Top 200 Pure Growth Portfolio (NYSEARCA:PXLG – Free Report )
PXLG holds 77 large cap stocks with strong growth characteristics selected from the Russell Top 200 Index. The index tracks largest 200 companies in the Russell 3000.
Holdings in the ETF are weighted based on their style score. Top five holdings are Netflix, Priceline, Tesla, Amazon and MasterCard currently. The product is well diversified with the top holding accounting for just about 3.5% of assets.
Consumer Discretionary stocks have the highest allocation in the ETF at 30%, followed by Information Technology at 27%.
iShares Global 100 ETF (NYSEARCA:IOO – Free Report )
This product provides exposure to 100 mega-cap multinational companies.
About 60% of the assets are invested in the US companies and about 38% in other developed countries. South Korea—considered an emerging market by some index providers—also gets a small allocation of about 2%.
IOO has an expense ratio of 40 basis points. It is up more than 11% this year.
SPDR Euro STOXX 50 ETF (NYSEARCA:FEZ – Free Report )
European stocks are outperforming US stocks this year as the economic growth in the region gains momentum and political risks have declined.
FEZ provides access to 50 of the largest Euro-zone companies. France and Germany together account for almost 70% of total fund assets. Looking at sector allocation, Financials, Industrials and Consumer Discretionary occupy the top spots.
Total SA, Siemens AG and Sanofi are top three holdings. The ETF is up more than 18% this year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>
Get the full Report on MGK – FREE
Get the full Report on PXLG – FREE
Get the full Report on IOO – FREE
Get the full Report on FEZ – FREE
Follow us on Twitter: https://twitter.com/ZacksResearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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
VANGD-MG CAP GR (MGK): ETF Research Reports
PWRSH-FP LG GR (PXLG): ETF Research Reports
ISHARS-GLBL 100 (IOO): ETF Research Reports
SPDR-EU STX 50 (FEZ): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research