The U.S. market has completed its five-year bull run trumping
all the difficulties from the U.S. government shutdown to the Euro
zone debt crisis to emerging market turmoil. The current rally is
neither the strongest nor the longest in history, but is considered
the fourth longest rally since 1945, as per the S&P Capital IQ.
The S&P 500 index has shown an enormous run, gaining close to
180% from the bear-market bottom reached in March 9, 2009. The
strong rally was mainly fueled by the Fed stimulus program, which
kept the interest rate at lower levels, and improving global
economic conditions (read:
3 Smart Beta ETFs to Beat the Market in 2014
The trend is likely to continue as the current bull market enters
into its sixth year. The outlook for this year also seems bright as
the U.S. economy is improving modestly, corporate profits are at
record levels, the job market is healing and consumer confidence is
rising. The jobless rate, which climbed to a high of 10% in 2009,
plunged to a five-year low of 6.6% in January.
Though the Fed has started to curtail its stimulus program, it has
promised to keep interest rates at lower levels until the
unemployment rate falls below 6.5%. Inflation level is also low,
while a falling budget deficit and recovering housing market are
fueling growth in the economy.
The White House expects the U.S. economic growth to pick up speed
from 1.7% in 2013 to 3.1% in 2014 and 3.4% in 2015. Given the
strong fundamentals, investors still seeking to ride out the
continued bull run could consider the following five ETFs (see:
all the ETF Categories here
These ETFs have been the biggest winners as the bull market turns
five. These have clearly outpaced the S&P 500 over the past
five years and are considered excellent choices to play the broad
rally. This is especially true as all five funds have a top Zacks
ETF Rank of '1' or '2', suggesting their outperformance may
continue in the coming months as well:
Guggenheim S&P SmallCap 600 Pure Value ETF (
This fund provides pure exposure to the small cap value segment of
the U.S. equity market by tracking the S&P SmallCap 600 Pure
Value Index. Holding 147 securities in its basket, the product is
widely spread across a number of securities as each firm holds less
than 2% share in the fund (read:
How 'Pure' ETF Strategies Crushed the Market
Industrials, consumer discretionary and information technology are
the top three sectors that collectively make up for nearly 55% of
total assets. The fund has amassed $177.8 million in its asset base
while average daily volume is low at nearly 25,000 shares.
The ETF charges 35 bps in annual fees and gained nearly 550% over
the past five years. RZV currently has a Zacks ETF Rank of 1 or
'Strong Buy' rating with High risk outlook.
Guggenheim S&P 500 Pure Value ETF (
This ETF tracks the S&P 500 Pure Value Index, which offers pure
exposure to the large cap value segment of the U.S. equity market.
The fund is widely diversified across 119 securities as none of
these make up for more than 2.3% of total assets. From a sector
look, the ETF is heavily concentrated toward financials at 26%,
while energy (16.14%), and utilities (15.5%) round off the top
The product has accumulated around $594.5 million in AUM and trades
in volume of more than 139,000 shares per day on average. The
expense ratio for this fund comes in at 0.35%, while RPV added
nearly 535% over the past five years and has a Zacks ETF Rank of 2
or 'Buy' with a 'High' risk outlook.
PowerShares Nasdaq Internet Portfolio (
This fund follows the Nasdaq Internet Index, giving investors
exposure to the largest and most liquid stocks in the broad
Internet industry. The ETF holds 79 stocks in its basket with AUM
of $416.6 million while charging 60 bps in fees per year. PNQI
trades in moderate volume of more than 78,000 shares a day.
In terms of holdings,
(FB) takes the largest share at 10.83%, closely followed by eBay
(EBAY) and Google (GOOG) with 8% share each. The fund is tilted
toward large cap and growth stocks and consumer discretionary and
telecom services take a minor portion in the basket. PNQI was up
about 443% over the past five years and has a Zacks ETF Rank of 2
or 'Buy' with a 'High' risk outlook (read:
Facebook to Buy WhatsApp, 3 ETFs to Watch
Guggenheim S&P Equal Weight Consumer Discretionary ETF
This fund provides equal weight exposure to 84 U.S. consumer stocks
by tracking the S&P 500 Equal Weight Consumer Discretionary
index. The ETF has amassed $105.8 million in its asset base while
charging 0.50% in expenses. Volume is light, trading below 26,000
shares a day.
Within the consumer discretionary sector, specialty retail takes
the top spot at roughly one-fifth of the total, followed by modest
allocations to media, hotel restaurants & leisure, and
household durables. Here, large cap and growth stocks take the
majority of the allocation. RCD returned over 433% over the past
five years and has a Zacks ETF Rank of 1 or 'Strong Buy' rating
with High risk outlook.
Guggenheim S&P MidCap 400 Pure Value ETF (
This fund provides pure exposure to the mid cap value segment of
the U.S. equity market by tracking the S&P MidCap 400 Pure
Value Index. The fund holds 97 stocks in its basket that are widely
spread across components. None of the securities accounts for more
than 2.9% of total assets while sector-wise, financials,
information technology and industrial take double-digit exposure.
The product is unpopular and relatively illiquid with AUM of just
$94.8 million and average daily volume of under 13,000 shares. The
ETF charges 36 bps in fees per year from investors and gained about
427% in the five year bull run. RFV currently has a Zacks ETF Rank
of 2 or 'Buy' rating with Low risk outlook (read:
Mid Cap ETFs Leading the Broad Rally
Based on promising trends and improving job market, it appears that
the 2014 bull will continue to rally and celebrate its sixth
anniversary next year, making any of the aforementioned ETFs
interesting picks once again.
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 >>
PWRSH-ND INTRNT (PNQI): ETF Research Reports
GUGG-SP5 EW C D (RCD): ETF Research Reports
GUGG-SP 400 PV (RFV): ETF Research Reports
GUGG-SP 500 PV (RPV): ETF Research Reports
GUGG-SP 600 PV (RZV): ETF Research Reports
To read this article on Zacks.com click here.
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