|Bid||89.14 x 900|
|Ask||90.50 x 1400|
|Day's Range||89.73 - 92.26|
|52 Week Range||73.23 - 101.22|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.16|
|Expense Ratio (net)||0.35%|
As bulls once again fall in love with Wall Street this year, several ETFs have shown strong resiliency and a solid relationship with investors, gaining in double digits.
Much of 2018 was rosy for the industrials sector. Businesses with excess cash early in the year fueled a spending spree on equipment and other industrials products as well. Given the poor general performance of the industrials sector in 2018, it comes as no surprise that exchange-traded funds (ETFs) which focused on these stocks also suffered as well.
While most of the stocks and ETFs have been plunging over the past one month, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas.
The mistletoe might be ideal for the kissing, but without aerospace and defense exchange-traded funds (ETFs) in your portfolio, it might be profits that you're missing. Aerospace and defense ETFs can provide investors with sustainable performance gains as meeting the defense needs of the federal government is a non-cyclical affair. In September, the Senate approved a wide-ranging, $854 billion bill that includes a $675 billion allocation towards the Defense Department, accounting for almost 80% of the total bill.
Democrats gained control of the House of Representatives in the recent midterm elections, but aerospace and defense stocks and exchange traded funds did not seem to mind. The iShares U.S. Aerospace & Defense ETF (ITA), PowerShares Aerospace & Defense Portfolio (PPA) and the SPDR S&P Aerospace & Defense ETF (XAR) have been one of the steadiest “Trump trades,” but those funds also posted solid gains following the midterm election results. “Our bull case envisions bipartisanship and an avoidance of gridlock, which creates funding certainty for defense names, but our bear case anticipates budget chaos and sequestration for fiscal 2020,” said Morningstar in a recent note.
United Technologies announced on Nov 23 that it has received approval from China's competition supervisor to acquire Rockwell Collins, putting aerospace and defense ETFs in focus.
Since the 2016 presidential election, aerospace and defense stocks and the corresponding exchange traded funds have been stellar performers, but in October, those assets were tested. The iShares U.S. Aerospace & Defense ETF (Cboe:ITA), the largest ETF dedicated to aerospace and defense stocks, tumbled last month, shedding almost 12%. A number of market analysts feel that this run in the aerospace and defense sector could continue even after the extended bull market continues to lose steam and delve into a full-blown correction.
Investors should focus on some strategies as to which sector should they take positions or which should be avoided if bipartisan government forms.
Shares of Boeing traded higher on Wednesday morning as the company reported better-than-expected third-quarter earnings and raised its 2018 earnings forecast to what may be a record revenue year for the aircraft manufacturer. Boeing reported adjusted earnings of $3.58 a share, which bested analyst expectations by 11 cents. In addition, third-quarter revenue was $25.15 billion--over $1 billion better than analyst expectations.
Aerospace and defense exchange-traded funds (ETFs) couldn't protect themselves from the volatility of the broad market as all four were in the red despite positive third-quarter earnings results from Lockheed Martin (etftrends.com/quote/LMT). The iShares U.S. Aerospace & Defense ETF (Cboe:ITA) fell 0.72%, PowerShares Aerospace & Defense Portfolio (PPA) slid 0.54%, SPDR S&P Aerospace & Defense ETF (XAR) fell 0.81%, and the Direxion Dly Aerospace&Def Bl 3X ShsETF (DFEN) dropped 1.65%. DFEN, in particular, seeks daily investment results equal to 300% of the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index, which attempts to measure the performance of the aerospace and defense industry of the U.S. equity market.
This week, aerospace and defense stocks like Lockheed Martin (etftrends.com/quote/LMT), Boeing (etftrends.com/quote/BA), General Dynamics (etftrends.com/quote/GD), and Raytheon (etftrends.com/quote/RTN) are set to release their third-quarter earnings, which could give the sector's exchange-traded funds a boost. Last month, the Senate approved a wide-ranging, $854 billion bill that includes a $675 billion allocation towards the Defense Department, accounting for almost 80% of the total bill. In short, the United States doesn't skimp on defense spending.
With a contentious midterms election season coming up, many anticipate a split government that could potentially impact the way ETF investors ride the markets ahead. Some expectations point to Democrats winning back the House of Representatives and the Republicans maintaining a narrow hold on the Senate - Republicans currently dominate both chambers. "If the consensus expectation of a divided government turns out to be correct, the most likely political consequences would be an increase in investigations and uncertainty surrounding fiscal deadlines," David Kostin, Goldman's chief U.S. equity strategist, said in a note.
Some politicians discuss an America-first agenda, one that has often been extolled by the current presidential administration. In a world where economic globalization is viewed as increasingly important, the America-first sentiment may be viewed as controversial.